Morgan Stanley Names Howmet Aerospace New Top Pick While Flagging Apple Earnings Risks and Dominating AI Trading Revenue

Morgan Stanley named Howmet Aerospace (HWM) its new top pick in the aerospace and defense sector, replacing FTAI Aviation, as the firm heads into third-quarter 2026 earnings with a bullish stance on the industry. Analysts argued that the recent aftermarket de-rating is overdone and recommended using it as a buying opportunity, pointing to constrained capacity in specialty metals, castings, and forgings, combined with unprecedented industrial gas turbine demand, as forces that should sustain pricing power through the cycle. The firm expects a low bar for positive surprises in Howmet's Q3 results and noted that supply chain execution, not weakening demand, remains the primary constraint on growth. Separately, Morgan Stanley cut its price target on GE Aerospace to $375 from $400 on valuation grounds.

On the broader market, Goldman Sachs, JPMorgan Chase, and Morgan Stanley have together generated $52 billion in equity trading revenue through the first three quarters of 2026, capturing nearly 80% of the five biggest banks' combined total of roughly $67 billion. The surge, which already surpasses the full-year 2025 record by $7 billion, has been driven by hedge fund margin lending for leveraged bets on AI hardware and Asian semiconductor supply chains. Goldman Sachs reported that equities financing activities jumped 96% in the third quarter to a record $3.37 billion.

Morgan Stanley's equity strategists also issued their list of highest-conviction earnings plays for the current season, highlighting 14 stocks with near-term catalysts. The firm's analyst Michelle Weaver noted that only 41% of early S&P 500 reporters saw positive next-day stock reactions, signaling a high bar. Bullish picks include Western Digital, TeraWulf, and Williams Companies, with the latter two tied to AI-driven power demand. Separately, the firm flagged Apple as facing a "slightly challenging" setup into its upcoming earnings, maintaining an Overweight rating and $355 price target but warning that holiday-quarter revenue and iPhone guidance may come in slightly below Wall Street estimates.

In other Morgan Stanley-related news, MSCI threatened to downgrade Indonesia from emerging-market to standalone status, triggering an 11.6% single-day plunge in the Jakarta Composite Index and erasing roughly $82 billion in market value over two days. Indonesia's President Prabowo Subianto publicly accused MSCI of "trying to scare us." On the analyst side, Morgan Stanley downgraded Carrefour after the French supermarket giant issued a profit warning tied to unprecedented civil unrest in France; Carrefour now expects operating margin growth of just 0 to 15 basis points against a prior forecast of 25 basis points, and flat to slightly higher earnings per share instead of high-single-digit growth, sending shares down 14%. Morgan Stanley also reiterated its Overweight rating and $300 price target on SpaceX, the Street-high call, citing AI revenue growth, while raising its price target on American Electric Power to $130 from $128 and trimming its target on Southern Company to $84 from $85. The firm was also named the 2026 Money Management Institute and Barron's Wealth Management Advisory Platform of the Year.