The AI revolution will cut nearly $1 trillion a year out of S&P 500 budgets, Morgan Stanley says—largely from agents and robots doing human jobs

AI·Fortune IntelligenceThe AI revolution will cut nearly $1 trillion a year out of S&P 500 budgets, Morgan Stanley says—largely from agents and robots doing human jobsBy Nick LichtenbergBy Nick LichtenbergFortune Intelligence EditorNick LichtenbergFortune Intelligence EditorNick Lichtenberg is Fortune Intelligence editor and was formerly Fortune's executive editor of global news.SEE FULL BIO The robots (and agents) are coming.Getty ImagesCorporate America is on the brink of a radical transformation as artificial intelligence adoption could unlock nearly $1 trillion a year in savings, according to a sweeping new analysis by Morgan Stanley

The lion’s of those savings, analysts say, will come from lowering payroll expenses and reducing the need for human workers in repetitive or cess-heavy roles

There are more caveats, as Morgan Stanley’s Thematic team cautions these cost savings would “ly take many years to achieve,” and they see “significant risk” of some companies not achieving full adoption levels

The “economic value creation,” as they put it, will come in a combination of cost cutting (e.g., lower headcount and lower costs to perform a wide variety of tasks by deploying AI) and new revenue and margin generation, as employees are freed up to spend more time on higher value-added activities that could both increase revenue and enhance margins

They see a wide variety of the balance between these two impacts, based on industry and occupation

The $920 billion in annual economic benefit could translate into a $13-$16 trillion boost in market value for the S&P 500, according to the report, depending on valuation multiples

That figure would amount to nearly a quarter of today’s entire market capitalization

Sectors most exposed Not all industries will feel the effects equally

Healthcare equipment and services, autos, and fessional services also face major disruption and opportunity

By contrast, industries that already run lean on labor relative to earnings—such as semiconductors and hardware—show comparatively lower AI value potential

Jobs at risk, new roles ahead Though the topline savings will come from payroll reductions, Morgan Stanley stressed the distinction between full automation and task-level augmentation

Agentic AI, which spans generative AI and software applications, tends to reassign tasks rather than eliminate jobs outright, while embodied AI in the form of humanoid robots poses more direct substitution risks in industries such as logistics and physical retail

The report also anticipates entirely new of jobs—from chief AI officers to AI governance specialists—emerging alongside the displacement trend, echoing earlier waves of nological disruption that boosted demand for grammers, IT fessionals, and digital marketers

Morgan Stanley A long ramp-up Despite the headline number, the analysts caution full adoption is ly to unfold over years, if not decades

Firms will lean first on attrition and cess efficiencies rather than immediate mass layoffs, particularly in sectors where customer-facing roles drive revenue

Still, the message for investors is : AI is no longer a speculative theme

The cost savings potential is so large it could become one of the most powerful drivers of U.S. corporate earnings growth in the second half of this decade

For this story, Fortune used generative AI to help with an initial draft

An editor verified the accuracy of the information before publishing

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