Measuring the Market’s Megatrends

Summary

Morgan Stanley strategists discuss how thematic investing is evolving from broad narrative calls into a more systematic, data-driven mapping framework. The framework assesses thousands of companies by whether theme exposure is central, supportive, or insignificant, and helps investors manage hidden portfolio exposures. Current valuation and earnings data flag AI adopters and societal shifts themes as relatively attractive opportunities.

• Paul Walsh, Michelle Weaver, and Daniel Blake introduce Morgan Stanley's thematic mapping framework.
• The framework scores company exposure to themes including AI, future of energy, societal shifts, and multipolar transition.
• The mapping assesses whether theme exposure is central, supportive, or insignificant to each company.
• Thematic mapping is positioned as useful for portfolio construction and hidden-exposure analysis.
• Michelle Weaver highlights AI adopters as inexpensive with strong expected earnings growth and improving analyst sentiment.
• She also highlights societal shifts themes as trading below typical valuation levels with improving earnings expectations.