Welcome to Thoughts on the Market.
I'm Stephen Bird, Morgan Stanley's Global Head of Thematic and Sustainability Research.
Today, the four key themes that will define markets and economies in 2026.
It's Monday, January 26th at 10 a.m. in New York. especially in periods of extreme volatility.
A thematic lens helps us step back from the noise and really focus on the structural forces reshaping economies, industries and societies.
And that perspective has delivered results.
In 2025, on average, our thematic stock categories outperformed the MSCI World Index by 16 and the SP 500 by 27.
And this really reinforces our view that long-term themes can be powerful drivers of alpha.
For 2026.
Our framework is built around four key themes AI and tech diffusion, the future of energy, the multipolar world and societal shifts.
Now, three of these themes carry forward from last year, but each has evolved meaningfully.
And one of our themes represents a major expansion on our prior work.
First, the AI and tech diffusion theme remains central, but has clearly matured and evolved.
In 2025, the focus was on rapid capability gains.
In 2026, the emphasis shifts to nonlinear improvement and the growing gap between AI capabilities and real-world adoption.
A critical evolution is our view that compute demand is likely to exceed supply meaningfully, even as software and hardware become more efficient.
As AI use cases multiply and grow more complex, the infrastructure, especially computing power, emerges as a defining constraint.
Next is the future of energy, which has taken on new urgency.
Energy demand in developed markets, long assumed to be flat, is now inflecting upwards, and this is driven largely by AI, infrastructure and data centers.
Compared with 2025, this theme has expanded from a supply conversation into one focused on policy.
Rising energy costs are becoming increasingly visible to consumers, elevating a concept we call the politics of energy.
Policymakers are under pressure to prioritize low-cost, reliable energy, even when tradeoffs exist and new strategies are emerging to secure power without destabilizing grids or increasing household bills.
Our third theme, the multipolar world, also builds on last year, but with sharper edges.
Globalization continues to fragment as countries prioritize security, resilience and national self-sufficiency.
Since 2025, competition has become more clearly defined by access to critical inputs such as energy materials, defense capabilities and advanced technology.
Notably the top-performing thematic categories in 2025, were driven by multipolar world dynamics, underscoring how geopolitical and industrial shifts are translating directly into market outcomes.
Now, the biggest evolution comes with our fourth key theme, which we call societal shifts.
And this expands on our prior work on longevity.
This new framework captures a wider range of forces shaping societies globally.
AI-driven labor, disruption and evolution, aging populations, changing consumer preferences, the K economy, the push for healthy longevity Now crucially, these themes don't operate in isolation.
AI accelerates energy demand.
Energy costs shape politics.
Politics influence supply chains and national priorities.
And all of this feeds directly into societal outcomes, from employment to consumption patterns.
The power of thematic investing lies in understanding these intersections, where multiple forces reinforce one another in underappreciated ways.
So to sum it up, the most important investment questions for 2026 aren't just about growth rates.
They're about structure.
Understanding how technology energy, geopolitics and society evolve together may be the clearest way to see where opportunity and risk are truly heading.
Thanks for listening.
If you enjoy the show, please leave us a review.
Wherever you listen and share thoughts on the market with a friend or colleague today,
The preceding content is informational only and based on information available when created.
It is not an offer or solicitation nor is it tax or legal advice.
It does not consider your financial circumstances and objectives and may not be suitable for you.
