AI and productivity: Productivity growth remains concentrated in high-AI exposed industries

To better assess the effects of AI, our recent publications examined innovation waves, labor displacement risks, and AI productivity. We found stronger productivity in high-AI industries than others. Here, updating, we find continued output & productivity gains, but with some labor replacement. Productivity, measured as output/employee, is rising faster in industries Morgan Stanley identifies as high-AI exposure than in median- or low-AI industries. Productivity accelerated more in high AI exposure industries than in median- or low-exposure industries in 2025 and remains stronger. The productivity pickup reflects faster output growth & capital deepening, but now also some labor displacement. Output/employee has risen 2.4% y/y through 2Q, twice the average pace of the past twenty years. Over the past four quarters, high-AI industries contributed 2.0pp of the 2.4% rise in economy-side productivity, up from 1.4pp a year earlier, while mid- and low-AI industries together contributed a more