European Equity Strategy: Sector Model Refresh: Doubling Down on AI, Banks, & Mining

Research evidence excerpt

European Equity Strategy: Sector Model Refresh: Doubling Down on AI, Banks, & Mining

Idea

June 9, 2026 04:52 AM GMT

Morgan Stanley & Co. International plc+MEuropean Equity Strategy | Europe Marina Zavolock

Equity Strategist

Sector Model Refresh: Doubling Marina.Zavolock@morganstanley.comRegiane Yamanari +44 20 7425-2318

Regiane.Yamanari@morganstanley.com +44 20 7677-4652

Down on AI, Banks, & Mining Leoni Externest, CFA

Leoni.Externest@morganstanley.com +44 20 7425-2681

We refresh our data-driven sector model, using the recent dip to

Morgan Stanley India Company Private Limited+

add to outstanding fundamentals across Europe's AI complex. Karthik Nityanand

Semis stays #1 with a rising score & growing number of stocks StrategistKarthik.Nityanand@morganstanley.com +91 22 6995-1587

on top. M&M up to 2nd from 9th of 30 sectors - upgrade to OW.

Morgan Stanley & Co. International plc+

CapGoods to OW from EW, led by AI exposures; Siemens Emily A Woods

Energy back to model #1. Notably outside of AI, Banks rise to 3rd EquityEmily.Woods@morganstanley.comStrategist +44 20 7425-1597

from 6th (stay OW) & we neutralize Defense from OW.

Jitiksha ShahA data-driven approach to sector selection: At the core of our sector model are

idiosyncratic factors that tend to work sustainably over time to drive relative stock Jitiksha.Shah@morganstanley.com +91 22 6995-9374

performance e.g. idiosyncratic momentum, consensus price target & EPS revisions

breadth, accruals, management sentiment changes, etc. We increase this component Amy Gower (Amy Sergeant), CFA

of our model to a c. 70% weight, from 60% previously, given high effectiveness Commodities Strategist

Amy.Gower1@morganstanley.com +44 20 7677-6937

since launch & high / rising stock-level dispersion. We combine this with more