NVIDIA Corp. (NASDAQ:NVDA) has become the world’s largest company as AI infrastructure spending surges, but Morgan Stanley (NYSE:MS) says the corporate adoption cycle that comes next has only just started.

“We’re at the national anthem” when it comes to AI adoption, Dan Skelly, head of market research and strategy at Morgan Stanley Wealth Management, told CNBC Monday.

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AI Spending Came First

Skelly said Morgan Stanley has heard “nothing but accelerating demand” during the past three weeks of corporate conference season.

Investors often ask what inning the AI adoption cycle is in, Skelly said. His answer has been that it is still at the “national anthem,” although he said the “first pitch of the top of the first inning” may now have been thrown.

But he separated that early adoption cycle from the infrastructure spending boom already underway.

“We’re not early in the spending cycle, but the adoption cycle is what’s going to matter next for this market,” Skelly said.

He expects tech-focused companies to adopt AI sooner and faster and said the benefits have only begun to show up in earnings. Skelly recommended investors remain biased toward higher-quality Magnificent Seven names.

An August Citi note showed the scale of the first phase. Google, Microsoft and Amazon’s combined cloud backlog reached $1.69 trillion in the second quarter, up from $1.45 trillion in the first, while backlog growth accelerated to 151% year over year.

AI Benefits Are Growing

Morgan Stanley’s Mike Wilson said in July that roughly 25% of S&P 500 companies cited measurable benefits from AI adoption in the second quarter, up from 14% a year earlier.

That means roughly three-quarters of the index still had not cited a measurable AI benefit, underscoring Skelly’s argument that the earnings impact remains early.

A separate February survey of 935 executives found companies using AI for at least a year reported an average 11.5% net productivity gain over the previous 12 months.

Nvidia Leads Year-End Market-Cap Odds

Nvidia has been the biggest market winner from the spending cycle Skelly says is already well underway. The question now is whether broader corporate adoption can justify that buildout.

Polymarket traders currently give Nvidia a 74% chance of finishing 2026 as the world’s largest company, compared with 16% for Apple and 8% for Alphabet.

The market has attracted about $7.45 million in trading volume.

Nvidia CEO Jensen Huang said last week the AI spending flywheel is “really, really flying.”

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