Morgan Stanley reckons the next AI jump is about to land like a brick through a window.
In a new report, the bank says a massive breakthrough is likely in the first half of 2026, and most of the planet is not ready.
The bank says executives at major US AI labs are telling investors to brace for progress that will “shock” them. It claims the gains are already racing ahead, with OpenAI’s GPT-5.4 “Thinking” model scoring 83.0 per cent on the GDPVal benchmark, putting it at or above human expert level on economically useful tasks.
The real choke point is electricity. Morgan Stanley’s “Intelligence Factory” model forecasts a net US power shortfall of 9 to 18 gigawatts through 2028, a 12 per cent to 25 per cent gap relative to the required capacity.
Developers are not waiting around for the grid to sort itself out. The report says bitcoin mining sites are being repurposed into high-performance compute barns, with natural gas turbines and fuel cells getting dragged in to keep racks humming.
Morgan Stanley claims the numbers are turning into their own weird religion, with a “15-15-15” dynamic taking hold. It describes 15-year data centre leases at 15 per cent yields, generating $15 per watt in net value creation.
The bank then jumps to the part everyone pretends isn’t happening: jobs going away. It says “Transformative AI” will be deflationary, because software can copy human output at a fraction of the cost, and executives are already cutting headcount on the back of it.
Morgan Stanley wraps it up by insisting the “coin of the realm” is becoming pure intelligence, minted from compute and power, and the timetable is getting aggressive.
