Who Will Fund AI’s $3 Trillion Ask?

Michael Zezas: Welcome to Thoughts on the Market. I'm Michael Zezas, Global Head of Fixed Income Research and Public Policy Strategy.

Ariana Salvatore: And I'm Ariana Salvatore, U.S. Public Policy Strategist.

Michael Zezas: Today we're diving into the administration's newly released AI action plan. What's in It, what it means for markets, and where the challenges to implementation might lie.

It's Thursday, July 24th at 10am in New York.

Things are not all quiet on the policy front, but with the fiscal bill having passed Congress and trade tensions simmering ahead of the new August 1st deadline, clients are asking what the administration might focus on that investors might need to know more about.

Well, this week it seems to be AI.

The White House just unveiled its sweeping AI Action Plan, the first big policy-signaling document since the administration canceled the implementation of former President Biden's AI Diffusion Rule. So, Ariana, what do we need to focus on here?

Ariana Salvatore: This document is basically the administration signaling how it intends to cement America's role in the global development of AI – through a mix of both domestic and global policy initiatives. There are over 90 policy actions outlined in the document across three main pillars: innovation, infrastructure, and global leadership.

Michael Zezas: That's right. And even though there's still some important details to flesh out here in terms of what these initiatives might practically mean, it's worth delving into what the different areas are outlining and what it might mean for investors here.

Ariana Salvatore: So first on the innovation front. The plan calls for removing regulatory barriers to AI development, encouraging open-source models, and investing in interpretability and robustness. There's also a push throughout the document to build world class data sets and accelerate AI adoption across the federal agencies.

Michael Zezas: Infrastructure is another main pillar here, and keeping with the theme of loosening regulation, the plan includes fast tracking permits for data centers, expanding access to federal land, and improving grid interconnection for power generation. There's also a call to stabilize the existing grid and prioritize dispatchable energy sources like nuclear and geothermal.

But that's where we may see some of these frictions emerge. As our colleague Stephen Byrd has talked about quite a bit, the grid remains a major constraint for power generation; and even with some of these executive orders, the President's ability to control scaling power capacity is somewhat limited.

Many of these policy tools to increase energy production to facilitate more data centers will likely have to be addressed by Congress, especially if any of these policy changes are to be more durable.

Ariana Salvatore: One area where the executive actually does have pretty broad discretion to control is trade policy, and this document focused a lot on the U.S.’ role in the world as we see increasing AI competition on a global scale.

So, to that point, the third pillar is around global leadership. Specifically, the plan calls for the U.S. to export its full AI stack – hardware, models, standards – to allies, while simultaneously tightening export controls on rivals. China's clearly a focal point here, and that's one that is explicitly called out in the document.

Michael Zezas: Right. And so, it all seems part of a proposal to form in International AI Alliance built on shared values and open trade; and the plan explicitly frames AI leadership as a strategic priority in the multipolar world.

It calls for embedding U.S. AI standards and global governance bodies while using export controls and diplomatic tools to limit adversarial influence. But you know, importantly, something we'll have to track here is what exactly are these standards going to be and how that will shape how industry in the U.S. around AI has to behave. Those details are not yet forthcoming.

So, there's a couple of threads here across all of this; deregulation, pushing for more energy generation, trade policy aspects. Ariana, what do you think it all means for investors? Are there key sectors here that face more constraints or face more tailwinds that investors need to know about?

Ariana Salvatore: Yeah, so really two key takeaways from this document. First of all, AI policy is a priority for the administration, and we're seeing them pursue efforts to reduce regulatory barriers to data center construction. Although those could run into some legal and administrative hurdles. All else equal reduction in data center, build time and cost benefits owners of natural gas fired and nuclear power plants. So, you should see a tailwind to the power and utility sector.

Secondly, this document and the messaging from the President makes AI a national security issue. That's why we see differentiated treatment for China versus the rest of the world, which is also reflected in the administration's approach to the broader trade relationship and dovetails well with our expectation for higher tariffs on China at the end of this year versus the global baseline.

Michael Zezas: Right. So, if AI becomes a national and economic security issue, which is what this document is signaling, it's one of the reasons you should expect that these tariff increases globally – but with a skew towards China – are probably durable. And it's something that we think is reflected in the sector preferences or equity strategy team, for example, with some caution around the consumer sector.

Ariana Salvatore: That's right. So, plan to watch as this unfolds.

Michael Zezas: That's it for today's episode of Thoughts on the Market. If you enjoy the show, please leave us a review and share Thoughts on the Market with a friend or colleague today.

Welcome to Thoughts on the Market. I’m Ben Swinburne, Morgan Stanley’s U.S. Media and Entertainment Analyst. Today – GenAI is poised to shake up the entertainment business.

It’s Wednesday, July 23, at 10am in New York.

It's never been easier to create art for anyone – with a little help from GenerativeAI. You can transform photos of yourself or loved ones in the style of a popular Japanese movie studio or any era of visual art to your liking. You can create a short movie by simply typing in a few prompts. Even I can speak to you in several different languages. I can ask about the weather:

 Hvordan er været i dag?

 Wie ist das wetter heute?

 आज मौसम कैसा है?

In the media and entertainment industry, GenAI is expected to bring about a seismic shift in how content is made and consumed. A recent production used AI to de-age actors and recreate the likeness of a deceased performer—cutting what used to take hundreds of VFX artists a year to just a few months with a small team. There are many other examples of how GenAI is revolutionizing how stories are told, from scriptwriting and editing to visual effects and dubbing.

In music, GenAI is helping music labels identify emerging talent and generate new compositions. GenAI can even create songs using the voices of long-gone artists – potentially extending revenue far beyond an artist’s lifetime.

GenAI-driven tools have the potential to reduce TV and film production costs by 10–30 percent, with animation and post-production among the biggest savings opportunities. GenAI could also transform how content reaches audiences. Recommendation engines can become even more predictive, using behavioral data to serve up exactly what listeners want—sometimes before we know what we want.

And there’s more studios can achieve in post production. GenAI can already dub content in multiple languages, even syncing mouth movements to match the new dialogue. This makes global distribution faster, cheaper, and more culturally relevant.

With better engagement comes better monetization. Platforms will use GenAI to introduce new pricing tiers, targeted advertising, and personalized superfan content that taps into niche audiences willing to pay more.

But all this innovation brings up profound ethical concerns.

First, there’s the issue of consent and copyright. Can GenAI tools legally use an actor’s name, likeness or voice? Then there’s the question of authorship. If an AI writes a script or composes a song, who owns the rights? The creator or the GenAI model?

Labor unions are understandably worried. In 2023, AI was a major sticking point in negotiations between Hollywood studios and writers’ and actors’ guilds. The fear? That AI could replace human jobs or devalue creative work.

There are also legal battles. Multiple lawsuits are underway over whether AI models trained on copyrighted material without permission violate intellectual property laws. The outcomes of these cases could reshape the entire industry.

But here’s a big question no one can ignore: Will audiences care if content is AI-generated? Some consumers are fascinated by AI-created music or visuals, while others crave the emotional depth and authenticity that comes from human storytelling. Made-by-humans could become a premium label in itself.

Now, despite GenAI’s rapid rise, not every corner of entertainment is vulnerable. Live sports, concerts, and theater remain largely insulated from AI disruption. These experiences thrive on real-time emotion, unpredictability, and human connection—things AI can’t replicate. In an AI-saturated world, the value of live events and sports rights will rise, favoring owners of sports rights and live platforms.

So where do we go from here?

By and large, we’re entering an era where storytelling is no longer limited by budget or geography. GenAI is lowering the barriers to entry, expanding the creative class, and reshaping the economics of media. The winners in this new landscape will likely be companies that can scale—platforms with massive user bases, deep data pools, and the engineering talent to integrate GenAI seamlessly. But there’s also room for agile newcomers who can innovate faster than the incumbents and disrupt the disrupters.

No doubt, as the tools get better, the questions get harder. And that’s where the real story begins.

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.