Investing.com -- Innovation, Security and Defence, and 'Core beneficiaries of AI' are the three most popular themes for retail investors into 2025, Morgan Stanley (NYSE:MS) said, citing its latest AlphaWise survey findings.
Innovation stands out as the top theme, with 48% of respondents choosing it as a preferred investment focus. The broad category encompasses areas like automation, advanced manufacturing, and fintech.
Morgan Stanley analysts spotlight Tesla (NASDAQ:TSLA), Siemens (ETR:SIEGn), and Adyen (AS:ADYEN) as leading players in these spaces, respectively, representing cutting-edge advancements in digitalization, energy solutions, and global payment systems.
Defense and security are gaining traction amid heightened geopolitical tensions. This theme ranked particularly high in Germany and the US, driven by younger investors and those increasingly mindful of global security risks.
“When we asked about how shifting geopolitics has changed perception, German retail investors and younger people were most likely to choose a greater propensity to invest in Defence/Security,” Morgan Stanley said in a note.
Notably, German-listed Rheinmetall (ETR:RHMG) is identified as a top pick in Europe, while Fortinet (NASDAQ:FTNT), with its cybersecurity focus, is favored in the US.
The third major theme is AI, specifically investments targeting its core beneficiaries. "We agree with the AI optimism and believe we are still in the early innings of AI's diffusion," the survey notes.
"Key ways to play the application rollout of AI are through AI Adopters with pricing power and AI-exposed software names."
In this context, Morgan Stanley highlights companies like Nvidia (NASDAQ:NVDA) and Salesforce (NYSE:CRM) in the US, alongside SAP (NYSE:SAP) and Relx (NYSE:RELX) in Europe.
The survey also reveals a broader engagement with private markets, as democratization efforts make these assets more accessible.
While still a small portion of total wealth, retail allocations to private markets doubled over the past year. Investment vehicles like Blackstone (NYSE:BX) in the US and CVC in Europe are seen as well-positioned to capitalize on this growing interest, according to Morgan Stanley.