We just published a list of the 10 Stocks to Watch from Morgan Stanley's Ultra-Selective Tailwinds Strategy , and Shake Shack Inc. (NYSE: SHAK ) ranked 9th 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.
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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.
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Shake Shack Inc. (NYSE:SHAK) 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 36 hedge funds in the Insider Monkey database at the end of Q2 2026.
Shake Shack Inc. (NYSE:SHAK) operates a restaurant chain where labour availability, kitchen throughput, and order processing directly influence profitability. Morgan Stanley believes that AI automation could help the company generate more revenue from its existing customer locations without requiring a proportional increase in labour costs. AI-powered ordering systems could also analyze purchasing patterns and recommend complementary products based on customer preferences.
In this regard, Shake Shack announced Project Catalyst in April 2026. The initiative is aimed at modernizing restaurant systems, launching the brand's first loyalty platform, expanding AI capabilities, advancing its data foundation to improve operational efficiency, deepen guest engagement, and unlock enterprise productivity. The project is particularly relevant because Shake Shack wants to grow from its current footprint toward 1,500 company-operated restaurants.
The restaurant company delivered a solid Q3 report on November 5, posting double-digit revenue growth, positive customer growth, and higher earnings. Notably, same-Shack sales were up 2.5% during the quarter, including positive traffic growth of 0.8%, marking the 5th consecutive quarter of traffic growth and extending the streak of positive same-Shack sales growth to 23 consecutive quarters.
That said, Shake Shack's restaurant-level margins declined, falling from 22.8% to 22.5%, despite the company's expanding scale. Additionally, Shake Shack is focused on premium food quality and experience rather than being the cheapest burger option. This could work against the company when consumers face financial pressure, forcing them to trade down toward cheaper alternatives.
Shake Shack Inc. is placed among the 7 Best Restaurant Stocks to Buy for Growth in 2026 . The top stock on this list has surged by almost 16% over the last year.
While we acknowledge the risk and potential of SHAK 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 SHAK 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 .
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This article is originally published at Insider Monkey .
