The Convergence of Mega-Secular Themes in 2026

In this episode of Thoughts on the Market, Steven Berg, Morgan Stanley’s global head of thematic and sustainability research, revisits the firm’s four foundational pillars for 2026: AI and tech diffusion, the future of energy, a multipolar world, and societal shifts. Berg argues that these trends are no longer moving in isolation; rather, they are experiencing a profound convergence that is fundamentally reshaping global markets.

The Acceleration of AI and Compute Demand

The most significant development since January is the "step change upward" in AI capabilities. This technological leap has triggered an "extraordinary surge in demand for compute." Berg notes that global AI usage, measured by "tokens"—the standard unit for text processing—has skyrocketed. Specifically, weekly token usage has jumped from 64 trillion to 227 trillion since early January, a 250% increase that has pushed the market into a state where "compute demand exceeds supply." This imbalance is identified as a primary source of "alpha generation" for investors.

AI’s Transformation of the Labor Market

Beyond compute, AI is exerting a transformative pressure on the labor market. Contrary to the fear of total job replacement, Berg clarifies that the effect is "not binary." While automation or augmentation will impact 90% of occupations, the net result is a structural transformation. Morgan Stanley’s assessment of five key sectors indicates a "4% job loss" on net, resulting from an 11% outright elimination of roles and 12% of jobs being "knocked back," partially offset by an "18% of new hires." The narrative here is one of evolving roles rather than simple obsolescence.

The Energy-AI Nexus

Perhaps the most critical intersection identified is the relationship between AI and power infrastructure. AI does not operate in a vacuum; it requires massive energy inputs. Berg estimates that "global data center power demand could increase by nearly 130 gigawatts by 2028." This creates a precarious situation where the U.S. faces a potential "10 to 20 percent shortfall in power availability." Consequently, energy is no longer just a commodity but a "strategic priority" directly tied to the growth of AI.

Geopolitics and the Drive for Self-Sufficiency

Geopolitical tensions, exemplified by the recent Iran conflict, have introduced volatility into energy markets and highlighted the fragility of global supply chains. These events have accelerated a "global push towards national self-sufficiency." This trend aligns with the "multipolar world" theme, where nations prioritize control over "critical minerals, technology, and energy." This shift toward sovereign control is expected to be a dominant market driver for years to come.

Conclusion: Investing at the Intersections

The performance data validates this thematic approach. Morgan Stanley’s thematic categories outperformed the S&P 500 by 27 percentage points in 2025 and are currently leading by 12 points in 2026. The strongest sectors—AI infrastructure, energy security, defense, and healthcare—all sit at the confluence of these forces. Berg concludes that the key to understanding future markets lies not in observing these themes individually, but in recognizing that "AI, energy, and geopolitics are now deeply interconnected forces" that will define the global economic landscape for the foreseeable future.