Variations on market themes
- Morgan Stanley updated its 2026 thematic predictions
- After AI, energy and national self-sufficiency are prominent
- Screens highlight stocks with exposure to different themes
A lot can happen in three months, as Morgan Stanley & Co. analysts recently noted in revisiting the 10 thematic predictions for 2026 they unveiled in January.
That includes a surge in “compute demand” and AI Large Language Model (LLM) capabilities, a change in the valuation of assets that can or cannot be replicated by AI, the continuing “politics of energy,” and a push for national self-sufficiency.1 As markets emerge from a volatile Q1, the report takes a fresh look at all the investing themes, and includes multiple screens highlighting stocks with exposure to them.
Although the AI story was well-established before the beginning of the year, the conflict in Iran may be shining a brighter light on the energy and self-sufficiency developments, with the latter closely tied to the defense sector.
For example, one of the stocks included in the defense screen is Rocket Labs (RKLB), which manufactures and launches rockets and satellites. Although it’s much smaller than two other defense names on the list, General Dynamics (GD) and RTX (RTX), the report also shows it’s much further below its estimated price target. On Monday, RKLB was more than 60% below its target, while GD and RTX were 21% and 17% below theirs.
That’s partly a function of the RKLB’s roughly 40% correction from its January record high to the low it hit last week, when it temporarily broke out of the bottom of a multi-week trading range:
Source: Power E*TRADE. (For illustrative purposes. Not a recommendation.)
While RKLB trails GD and RTX so far in 2026, it has outperformed them by a wide margin year over year—roughly 280% vs. 30% and 70%, respectively.
At the end of March, Morgan Stanley & Co. analysts at the annual SATShow satellite conference in Washington, D.C. noted that they heard the term “sovereign solution” more times than they could count. In other words, in a world of elevated global military activity and fast-shifting alliances, governments are seeking greater control over “space infrastructure and the data that moves through it.”2
Today’s numbers include (all times ET): ISM Services Index (10 a.m.).
Today’s earnings include: Levi Strauss (LEVI).
Click here to log on to your account or learn more about E*TRADE's trading platforms, or follow the Company on Twitter, @ETRADE, for useful trading and investing insights.
1 MorganStanley.com. Revisiting Our 10 Thematic Predictions. 4/6/26.
2 MorganStanley.com. Reflections from SATShow Week. 3/31/26.