Morgan Stanley’s Katerina Simonetti says the industrial sector remains a top pick this year, fueled by AI-driven opportunities. She highlights key companies poised to benefit and where investors can still find buying potential in the growing AI trade.

Wall Street

Morgan Stanley's Private Wealth Management Executive Director, Katerina Simonetti, advises investors to look beyond the most prominent AI companies and consider a broader range of sectors that stand to benefit from artificial intelligence. She highlights the importance of companies involved in infrastructure, energy, and industrials, noting that these sectors are integral to the ongoing expansion and implementation of AI technologies.

Simonetti points out that AI is likely to impact nearly every industry, with particular benefits in healthcare, financials, and utilities. She emphasizes that the industrial sector, despite making up a smaller portion of the S&P 500, has shown strong performance and serves as a crucial component in supporting AI adoption and broader economic growth.

Morgan Stanley: Industrial sector a top AI investment pick

Certainly over the last few weeks folks, everybody and their mother and their mother's financial advisor seems to have started talking about AI bubbles, circular money, and even the old vendor financing fears from 25 years ago. Now worries about energy, suddenly the hot new thing, that's great. But your first guest today says you need to stay calm and look through some of the scary stuff. Morgan Stanley, Private Wealth Management Executive Director and Private Wealth Advisor Katerina Simonetti joins us on set. You know what I mean. Suddenly it's become very in vogue to talk about AI bubbles and the lack of energy. You guys have been talking about it for a while, I kind of like it, feel complimented by it. What are you talking about with clients, however? Brian, thank you for having me on the show and it's a very fair question because you see this barbell happening with AI conversation. On one side you have this core AI names that everybody is following, on the other side is this search for almost the next big thing, this micro caps that is not productive. And I think that the core advice that we can give to our clients and investors right now is to broaden our look at AI. Just go at it from 10,000 foot view and look at the companies that participate in the build up of infrastructure, of the data centers, look at the companies that are going to give us energy, the nuclear and this more portable type of stations. Anything from wiring to also the key participants and companies that are going to benefit from AI implementation like healthcare, like financials. And if we look at it that way, that's when the AI story becomes a true story because we compare AI a lot to internet but I think it's more like electricity. Yeah, and I love that because I was talking to a former banker today and he made a great point. He was saying basically that we treat AI like a monolithic thing, like it's like this is AI and everything. No, it's going to be AI for apps, for everybody is going to be using AI for whatever they do. CNBC will use it, utilities will use it, clothing companies will use it, it will kind of get spread out. So it sounds like you're saying there's a lot of opportunity all along sort of that sprinkled margin. Absolutely, and the key is to understanding AI and understanding the profitability and the expansion of the pricing power that it can bring. So going away from it's the next best thing and accepting it as the key core component of our life that is not going away, that is going to drive this market to the new levels of growth. So we do not think that we're in a bubble, we think there is a lot of opportunities in the sector, we just need to get a deep understanding of what it is that we are buying and owning. So when you think of, first of all thanks for being here, nice to see you in person. When you think about the industries that would be really effective in a positive way by cutting costs, like banks or something like that, beside banks, which we can really see the promise there, what are the other types of industries that will really be the beneficiary of the efficiency they can gain? Well absolutely and first of all I would say probably every industry, right, like I cannot think of the industry that would not, but the top of mind is healthcare. When we think about the clinical trials that used to take years, with AI right now we can narrow down the list of potential candidates, patients with certain traits, the outcome, they can analyze the data so quickly right now, so things that would take years are not going to be significantly more efficient. When it comes to clothing, right, like choosing clothes and styles and figuring out where you're going to shop. Or neckties, Brian. Exactly. That's a very, by the way, that is a fantastic tie. AI simulated. I want to say that is just, you have style and class. Steve Grasso? Marina, for clients, when you want to get them out of tech or more diversified and you talk about utilities or you talk about industrials, industrials are only 9% of the S&P. So it's hard to get a lot of attention there. Do you get pushed back there? Do they want the shiny thing, the new thing? Not at all. It's hard to argue with industrials being up 17% this year and in our view industrials not only is a key component of the AI story, but also the buildup of the infrastructure in this country. Our roads, our bridges, our energy infrastructure. I mean, everything, single thing really relies of us having a strong core industrial base. And again, it's understanding how it really is the glue that ties everything together. And it's also a great defensive sector. It doesn't feel defensive at being up 17%, but it is a key component of investment. Thank you. Thanks. Thank you.

National Guard troops are preparing to be deployed to Chicago. Members of the Texas National Guard arrived just outside the city on Tuesday. The move is being criticized as an abuse of presidential authority.

Chicago

National Guard troops preparing to deploy in Chicago

The Trump administration is $2,500 money to undocumented minors to self-deport. Lawyers have criticised the move, saying children aren't mature enough to make that decision.

Washington

Trump admin offers cash to migrant teens who self-deport

U.S. President Donald Trump welcomed Canadian Prime Minister Mark Carney to the White House, where he promised to treat Canada fairly in trade talks, but was less committed to a continental trade deal that also includes Mexico.

Global Tariffs

Trump promises trade fairness for Canada during Carney's visit

From Tel Aviv to the Nova Music Festival site, Israelis gathered to remember those who were killed in the October 2023 Hamas attack.

Tel Aviv-Yafo

Middle East Conflict

Israelis remember victims two years after Hamas attack

Saudi Arabia's Riyadh Comedy Festival is attracting global stars including Dave Chappelle, Pete Davidson and Kevin Hart, with reports that some are being paid more than $1 million each. The event is part of Crown Prince Mohammed bin Salman's push to rebrand the conservative kingdom through sports and entertainment.

Riyadh

Riyadh Comedy Festival draws top U.S. comedians amid controversy

Three U.S.-based scientists have won the Nobel Prize in physics for their work on quantum mechanics. The physics award is the second 2025 Nobel Prize to be announced this week.

Stockholm

Three U.S.-based scientists win Nobel Prize in physics

As the war in Gaza reaches its two-year mark, Israel and Hamas continue negotiations in Egypt. Talks are centered on a proposed ceasefire deal, which includes a partial Israeli withdrawal from Gaza and a hostage-prisoner exchange.

Cairo

Israel and Hamas resume Gaza ceasefire talks in Egypt

Israel has deported activist Greta Thunberg along with 170 others who were detained after Israeli forces intercepted a flotilla attempting to deliver aid to Gaza last week. Some of those deported in recent days have reported mistreatment, allegations that Israel has denied.

Israel deports Greta Thunberg after Gaza Flotilla interception

Leaders in the U.S. state of Illinois are taking President Donald Trump to court, looking to stop the deployment of hundreds of National Guard troops to the streets of Chicago. The White House argues that soldiers are needed to prevent so-called lawlessness.

Chicago declares 'ICE Free Zones' amid clashes over raids

French President Emmanuel Macron has given Prime Minister Sebastien Lecornu 48 hours to stabilize the government following his sudden resignation. Lecornu stepped down hours after naming his cabinet, amid criticism and growing political instability in a parliament without a clear majority.

Paris

Macron gives Lecornu two days to salvage government after resignation

Microchip maker AMD got a huge boost in the race to supply the artificial intelligence revolution. OpenAI, the company behind major AI platform ChatGPT, announced a deal for AMD to provide the AI startup with its high-performance processing chips starting next year.

Santa Clara

Rise of AI

AI chipmaker AMD strikes major deal with OpenAI

It's a race against time to save the remaining 200 or so stranded climbers on Mount Everest after a massive storm dumped at least three feet of snow over the weekend.

Gorakshep

About 200 Mount Everest climbers still stranded

Clashes broke out at ICE facilities in Chicago and Portland after President Trump ordered National Guard troops into both cities. The move has intensified tensions between federal authorities and local officials amid ongoing protests.

Clashes erupt as Trump deploys National Guard

Former NFL quarterback and Fox Sports analyst Mark Sanchez was charged with felony battery involving serious bodily injury, and could face up to six years in jail, according to Marion County Prosecutor Ryan Mears.

Indianapolis

Mark Sanchez charged with felony, could face up to 6 years in jail

Illinois Gov. JB Pritzker and Chicago Mayor Brandon Johnson announced on Monday a lawsuit against the Trump administration over plans to deploy the National Guard to Chicago.

Illinois, Chicago sue Trump over National Guard deployment

A selloff in French markets gathered pace after French media reports that Prime Minister Sebastien Lecornu has resigned. French stocks fell sharply, government bond yields were up 8 basis points and the euro was last down 0.65% at $1.1667.

French markets tumble after PM Lecornu resigns

Former NFL quarterback Mark Sanchez has been charged with battery, intoxication, and unlawful entry after allegedly attacking a 69-year-old truck driver in Indianapolis. The driver stabbed Sanchez in self-defense, believing his life was in danger. Sanchez is currently hospitalised.

Ex-NFL star Mark Sanchez faces criminal charges in alleged assault

U.S. President Donald Trump's battle with Democratic-led cities is heating up after 200 California National Guard troops have been reassigned to Oregon, despite a judge blocking the deployment to Portland.

Portland

Trump sends National Guard to Oregon despite court block

Israeli planes and tanks pounded areas across the Gaza Strip overnight and on Sunday, destroying several residential buildings, witnesses said, as Palestinians hoped a U.S. plan to end the war would soon ease their suffering.

Jerusalem

Israeli strikes on Gaza continue ahead peace talks

Amenhotep III ruled between 1390 and 1350 BC and was one of the most prominent pharaohs of ancient Egypt.

Pharaoh's tomb reopened after more than 20 years of renovations

President Trump has thrust the U.S. military into a critical role deterring illegal crossings into this country at the southern border. As Charlie D'Agata reports, their presence is having unintended consequences.

Santa Teresa

U.S. military presence at southern border angers hunters, hikers

A new CBS News poll shows a majority of Americans disapprove of how President Trump and congressional Republicans and Democrats have handled the government shutdown. Willie James Inman reports on that and Mr. Trump's latest National Guard moves.

Americans fed up with shutdown, poll finds

Negotiators between Hamas and Israel will begin meetings in Cairo on Monday (October 6) for the release of the remaining 20 hostages and a prisoner swap.  There is a lot of pressure on both sides to get a deal done.

Negotiations between Israel, Hamas set to begin

Japan's ruling party picked hardline conservative Sanae Takaichi as its head on Saturday, putting her on course to become the country's first female prime minister in a move set to jolt investors.

Tokyo

Right-wing Sanae Takaichi set to be Japan's first female premier

For a second day, Israel is launching more strikes on the Strip defying demands from the U.S. to stop attacks. At least 61 Palestinians were killed in attacks across the Strip.

Israel intensifies Gaza bombardment despite U.S. pressure to stop

Israeli Prime Minister Benjamin Netanyahu says he hopes to announce the release of all the hostages being held by Hamas in Gaza in one fell swoop in the coming days.

Netanyahu: Gaza peace deal is 'close'

The government shutdown reached its fourth day on Saturday. The Senate on Friday went home after another failed vote to keep the government open. Willie James Inman has the latest.

No signs of compromise as government shutdown continues

Tensions are high in Portland, Oregon, as National Guardsmen could possibly be deployed there as early as this weekend. Federal agents and demonstrators squared off again, but Portland's mayor and chief of police say they don't need the help.

Protests in Portland as National Guard mobilizes

“I believe they are ready for a lasting peace.” the U.S president wrote on social media after Hamas announced it was willing to release the hostages and hand over power to other Palestinians.

Trump urges Israel to stop bombing Gaza after peace breakthrough

Israel slowed its Gaza offensive on Saturday after U.S. President Donald Trump demanded it stop bombing in response to Hamas saying it was ready to free hostages under the U.S. plan to end the two-year-old war.

Breakdown