Morgan Stanley (MS) is Well Positioned to Benefit from AI Capital Raising

Morgan Stanley (MS) is Well Positioned to Benefit from AI Capital Raising

Fri, August 28, 2026 at 5:47 PM GMT+3 3 min read

• ^GSPC +0.51%
• MS-PQ -0.15%

Baron Capital, an investment management company, released its second-quarter 2026 investor letter for its "Baron Financials ETF". A letter can be downloaded here. In the quarter ended June 30, 2026, Baron Financials ETF™ (the Fund) increased by 1.82%, underperforming both the MSCI USA Financials Index (up 8.93%) and the FactSet Global FinTech Index (up 6.14%). U.S. equities soared, largely driven by AI infrastructure investments, despite challenges from the U.S.-Iran war, changing Federal Reserve rates, and consumer sentiment hampered by high living costs and inflation. Most gains were concentrated in Information Technology (IT) and Industrials, with IT outperforming the broader market at 31.8%, contributing significantly to the S&P 500's growth. Although growth outperformed value in the quarter, value remains ahead year to date. Small caps notably surpassed large caps. The Fund's underperformance relative to the Financials Index stemmed from lower bank exposure and a higher allocation to software and data firms affected by AI disruption fears. The Fund believes its holdings are undervalued and have a positive outlook, as economic conditions remain strong with healthy consumer and business spending. Also, check the fund's top five holdings to see its best picks in 2026.

In its second-quarter 2026 investor letter, Baron Financials ETF highlighted Morgan Stanley (NYSE:MS). Morgan Stanley (NYSE:MS), a global financial holding company that offers financial products and services, contributed 0.90% to the Fund's performance this quarter. On August 27, 2026, Morgan Stanley (NYSE:MS) closed at $214.86 per share. Over the past month, Morgan Stanley (NYSE:MS) returned 2.11%, while its shares have gained 42.78% in the last 52 weeks. Morgan Stanley (NYSE:MS) has a market capitalization of $337.452 billion, and its stock has traded within a 52-week range of $145.66 to $232.25.

Baron Financials ETF stated the following regarding Morgan Stanley (NYSE:MS) in its Q2 2026 investor letter:

"Morgan Stanley (NYSE:MS), a leading global investment bank and wealth manager, contributed to performance on strong execution across the franchise. First quarter results exceeded expectations by a wide margin, with record fee-based flows in Wealth Management and record revenues in Institutional Securities, which includes trading and investment banking. Together, these results drove a 27% return on tangible equity. Management underscored its confidence by raising the dividend by 15% and authorizing a new share repurchase program of up to $20 billion. Morgan Stanley is also benefiting from a favorable macroeconomic environment as capital markets activity improves across corporate deal-making and trading. Among financial companies, the firm is viewed as relatively well insulated from AI-related threats and stands to benefit from the capital-raising required to fund the multi-year AI infrastructure buildout. Rather than reflecting a single strong quarter, these results demonstrate the earnings power of Morgan Stanley's integrated, fee-based business model. We retain long term conviction in the stock."

Morgan Stanley (NYSE:MS) is not on our list of the 40 Most Popular Stocks Among Hedge Funds. As per our database, 86 hedge fund portfolios held Morgan Stanley (NYSE:MS) at the end of the second quarter, which was 80 in the previous quarter. While we acknowledge the potential of Morgan Stanley (NYSE:MS) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

In another article, we discussed Morgan Stanley (NYSE:MS) and highlighted a list of Jim Cramer's biggest winners to buy. In addition, please check out our hedge fund investor letters Q2 2026 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.