Episode Details

Our Strategist Michelle Weaver talks to Michael Zezas and Jessica Alsford, Co-Directors of the Morgan Stanley Institute, about how AI, energy resilience and industrial policy are changing investment decisions.

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Michelle Weaver: Welcome to Thoughts on the Market. I'm Michelle Weaver, Morgan Stanley's U.S. Thematic and Equity Strategist.

Michael Zezas: I'm Michael Zezas, co-director of the Morgan Stanley Institute and Deputy Global Head of Morgan Stanley Research.

Jessica Alsford: And I'm Jessica Alsford, Morgan Stanley's Chief Sustainability Officer, and also co-director of the Morgan Stanley Institute.

Michelle Weaver: Today: how AI, energy, geopolitics, and industrial investment are competing for scarce resources – and what that competition could mean for markets.

It's Friday, July 31st at 10am in New York.

Jessica Alsford: And 3 pm in London.

Michelle Weaver: Mike and Jess, as co-directors, you speak with people across the firm to identify the biggest questions facing companies and investors, especially the important ones that may not have clear answers yet. And to understand how those questions are shaping client conversations. 

Mike, what's one of the questions that you think investors are wrestling with the most right now?

Michael Zezas: So, one of the biggest questions is how several major investment cycles can happen at the same time. AI, energy infrastructure, manufacturing, and defense may all be competing for the same power, the same skilled labor, equipment, and capital. 

So, investors need to look beyond each theme in isolation and ask where constraints could delay projects, raise costs, or redirect spending, and which companies are best positioned to manage all of that.

Michelle Weaver: Since the institute began, you've examined a number of topics, including AI, energy resilience, and geopolitical fragmentation, just to name a few. Jess, which topic has been the most compelling to you?

Jessica Alsford: It's difficult to pick one because, to be honest, for me, it's really the way that AI, energy resilience, and geopolitics have all really become one story. If you think about the energy transition, which has been playing out for a number of years. But now we also have the AI build-out, and that depends on reliable and affordable power. And then geopolitical shocks, which are demonstrating the need for countries to have energy security.

So, if you put all of this together and you can really see that there is a huge need to scale the global energy system, but using all types of power available to us, including renewables and nuclear.

Michelle Weaver: Mike, how is that intersection that Jess spoke about between AI, energy, and geopolitics altering the way that companies are thinking about investing?

Michael Zezas: So, geopolitical shocks, they're more norm than exception now. The situations in Iran, Ukraine, Venezuela, they all reflect an evolving international order where the U.S. is less interested than it used to be in preserving global security and trade standards.

And that's a particular problem in a world where companies and governments spent much of the last 50 years optimizing to benefit from globalization. So basically, looking for the lowest cost way to produce things, sourcing materials and labor in the most efficient way possible, presuming that the frictions in international goods and services trade would just keep getting lower.

That's obviously not the case now, and whether it's a good idea or not, th