More market volatility is ahead but not necessarily bad news, says Morgan Stanley's Sherry Paul

Watch on YouTube ↗  |  January 26, 2026 at 21:13  |  4:42  |  CNBC
Speakers
Sherry Paul — Managing Director, Morgan Stanley Private Wealth Management

Summary

Sherry Paul of Morgan Stanley discusses market volatility and the shift away from the Magnificent 7 toward thematic areas including AI, automation, innovation, and longevity. She favors equal-weight exposure over mega-cap concentration, sees software as vulnerable to advanced AI, and highlights healthcare as a sector where AI can improve profits. She also notes that a 'new world order' narrative is increasing urgency around supply chains, AI, and automation.

  • Sherry Paul expects more volatility but views it as part of an emergent market shift.
  • She recommends leaning into equal-weight S&P 500 areas over mega-cap concentration.
  • She is underweight software due to vulnerability to advanced AI.
  • She favors Magnificent Thematics: AI, automation, innovation, and longevity.
  • She sees healthcare profits improving through AI adoption.
  • She notes convergence of corporate and government AI spending.
Ideas
Sherry Paul Managing Director, Morgan Stanley Private Wealth Management 1:29
Overweight AI, automation, innovation, longevity thematics.
She believes the market is moving away from the Mag-7 into 'Magnificent Thematics': new world order, AI, automation, innovation and longevity. The shift from deglobalization language to a 'new world order' increases urgency around reimagining supply chains, partnerships and advancing AI/automation manufacturing in the US. Corporate and government AI spending are converging, and she advises overweighting these thematic sector exposures rather than moving to cash.
AI-SECTOR Automation Innovation AGNG HIGH
Sherry Paul Managing Director, Morgan Stanley Private Wealth Management 2:31
Lean into S&P 500 equal weight.
She prefers leaning into the 'other 473' equal-weight areas rather than concentrating in the mega-cap Magnificent 7, arguing the Mag-7 have become holding-company-like and create distortion, making equal weight important for traditional investors and ETFs. She sees value unlocking in the broader market as every company becomes a tech company and would not move to cash.
RSP HIGH
Sherry Paul Managing Director, Morgan Stanley Private Wealth Management 3:32
AI can improve healthcare profit margins.
She highlights healthcare as a place where AI application can advance productivity, cost-cutting and innovation, leaving room for profits to improve across the spectrum. It is one of the areas she and the host have discussed frequently.
XLV MED
Sherry Paul Managing Director, Morgan Stanley Private Wealth Management 4:09
Underweight software on advanced AI vulnerability.
She is underweight software within tech subcategories because it carries the most vulnerability to advanced AI. Many software names have traded poorly, and she prefers other tech areas that are not traditionally considered tech but are adopting AI to compete in hyperscaling, where corporate and government AI spending are converging.
IGV HIGH
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This CNBC video, published January 26, 2026, features Sherry Paul discussing AI-SECTOR, Automation, Innovation, AGNG, RSP, XLV, IGV. 4 trade ideas extracted by AI with direction and confidence scoring.

Speakers: Sherry Paul  · Tickers: AI-SECTOR, Automation, Innovation, AGNG, RSP, XLV, IGV