We just published a list of the 10 Stocks to Watch from Morgan Stanley's Ultra-Selective Tailwinds Strategy , and Cintas Corporation (NASDAQ: CTAS ) ranked 7th on this list.
Artificial intelligence is rapidly reshaping the current corporate landscape. However, the next phase of its economic impact may extend well beyond the companies developing AI models, semiconductors, and data centers.
In its September 2026 report, AI Beneficiaries: Investing in Second-Order Effects – Update: 100x AI Cultures, Morgan Stanley argued that investors should keep a close eye on businesses that can successfully integrate the technology into their workflows more effectively than peers and use it to significantly enhance their productivity. In the long run, these beneficiaries of the second-order effect of the AI boom could drive even greater returns than companies that simply supply the infrastructure behind it.
Don't want to miss out on the AI craze? Here are the 10 Best Performing AI Stocks of 2026 .
The report draws on historical examples to justify its argument. During the automobile revolution, car manufacturers appeared to be the obvious initial beneficiaries. However, their long-term returns were limited by intense competition and industry consolidation. Meanwhile, companies such as the Walton family's retail giant capitalized on the broader shifts enabled by automobiles, including suburbanization and expansion of big-box retail.
Similarly, the widespread adoption of Wi-Fi did not necessarily translate into exceptional returns for router manufacturers, while Netflix emerged as a clear winner from the subsequent growth of streaming. Morgan Stanley believes that AI could follow a similar pattern, with AI-driven automation and productive workforces representing a similar second-order investment opportunity.
To identify potential winners, the firm developed an indicator called the AI Productivity Spread, calculated by subtracting the growth in average technical employee compensation from the growth in revenue per technical employee. A positive and widening spread suggests that the organization is particularly effective at translating AI adoption into higher employee productivity and business output. Morgan Stanley analyzed around 750 publicly traded technology companies and approximately 40 million employee records, concluding that the businesses with the highest AI Productivity Spreads subsequently delivered better stock returns compared to their peers.
Beyond the technology sector, the report examines how AI-driven automation could improve corporate profitability throughout the broader economy. Morgan Stanley estimates that automating half of the positions classified as having a high probability of automation across the 1,000 largest publicly traded companies could eliminate around 1.7 million jobs and cut labor costs by $207 billion. After accounting for the distribution of these savings among shareholders, employees, customers, and suppliers, these companies could retain an estimated $87 billion in additional profits.
AI-driven automation is expected to be a game changer for many industries. Check out our list of the 10 Best Robotics and Automation Stocks To Buy That Are On Sale .
In conclusion, as AI tools become more widely available, Morgan Stanley believes that the companies that integrate them more effectively into their operations could capture a disproportionate share of the resulting economic benefits.
ALSO READ: 10 Cheapest AI Data Center Stocks to Buy According to Billionaires .
Cintas Corporation (NASDAQ:CTAS) is among the companies that Morgan Stanley identified as being particularly well-positioned to benefit from the next phase of AI adoption. The stock was held by 64 hedge funds in the Insider Monkey database at the end of Q2 2026.
Cintas Corporation (NASDAQ:CTAS) provides workplace uniforms, facility services, cleaning supplies, and related business services.
Morgan Stanley highlighted the potential of automation in the company's centralized cleaning facilities, which could help improve processing efficiency, reduce manual labour, and increase facility throughput. The combination could improve operating margins over time. Additionally, the analyst firm pointed out that AI-powered sales technology could help Cintas identify additional opportunities to cross-sell products and services to its clients, allowing it to generate more revenue from its existing customer base.
That said, the bigger opportunity still lies outside its existing base. Cintas estimates there are 16 million to 20 million businesses in its market compared to around 1 million customers today. The company has been successful in capitalizing on this. Cintas' organic revenue grew by 9% in the August quarter, an acceleration from prior quarters, with two-thirds of this growth continuing to come from first-time outsourcers.
Notably, the lion's share of this growth comes from doing more business with more customers instead of just raising prices. Gross margin also stood at an all-time high. Cintas is expecting revenue growth of 7.9% to 8.9% and EPS growth of 8.5% to 11.3% EPS for FY 2027.
That said, despite its scale, Cintas operates in a fragmented market. Its competitors include national providers, regional uniform rental companies, local laundry operators, retailers, and businesses that choose to handle certain services internally. If this competition intensifies, the company may have to sacrifice some pricing flexibility to retain customers.
Click here to see what Jim Cramer thinks about Cintas .
While we acknowledge the risk and potential of CTAS as an investment, we believe certain AI infrastructure stocks offer far stronger long-term potential at a much more attractive entry point. If you are looking for an AI stock more promising than CTAS that operates as a critical AI tollbooth and stands as the most important company in the world, check out our report about this must-own AI stock .
READ NEXT: Jim Cramer Says Buy the Dip in Sterling Infrastructure (STRL), Just "Don't Buy It All at Once" and Jim Cramer Doubles Down On CoreWeave (CRWV), Sort Of
This article is originally published at Insider Monkey .
