Thoughts on the Market: Summary of "Trump‘s AI Action Plan"

Podcast Information:

• Title: Thoughts on the Market
• Host: Morgan Stanley
• Episode: Trump‘s AI Action Plan
• Release Date: July 24, 2025
• Description: Short, thoughtful, and regular takes on recent events in the markets from a variety of perspectives and voices within Morgan Stanley.

Introduction

In the July 24th episode of Thoughts on the Market, hosts Michael Zezas and Ariana Salvatore delve into the newly released AI Action Plan unveiled by the Trump Administration. They explore its contents, implications for the markets, and potential challenges in its implementation amidst ongoing fiscal and trade developments.

Overview of the AI Action Plan

Michael Zezas opens the discussion by setting the stage for the AI Action Plan, highlighting its significance as the first major policy document following the cancellation of former President Biden's AI Diffusion rule.

“[00:09] A: Today we're diving into the Administration's newly released AI Action Plan, what's in it, what it means for markets, and where the challenges to implementation might lie.”

Ariana Salvatore provides an overarching view of the plan, emphasizing the administration's intent to solidify America's leadership in AI through a comprehensive set of domestic and international policies.

“[00:56] B: This document is basically the administration signaling how it intends to cement America's role in the global development of AI through a mix of both domestic and global policy initiatives.”

The plan outlines over 90 policy actions categorized under three main pillars: Innovation, Infrastructure, and Global Leadership.

Innovation Pillar

The Innovation section focuses on fostering AI development by removing regulatory hurdles, promoting open-source models, and investing in the interpretability and robustness of AI systems.

“[01:30] B: So first on the innovation front, the plan calls for removing regulatory barriers to AI development, encouraging open source models, and investing in interpretability and robustness.”

Key initiatives include:

• Building World-Class Data Sets: Enhancing data quality and accessibility to support advanced AI research.
• Accelerating AI Adoption in Federal Agencies: Integrating AI technologies across government operations to improve efficiency and effectiveness.

Michael Zezas underscores the importance of these measures for investors, noting that while details are still forthcoming, the broader goals indicate a favorable environment for AI-related investments.

“[01:14] A: That's right, and even though there's still some important details to flesh out here in terms of what these initiatives might practically mean, it's worth delving into what the different areas are outlining and what it might mean for investors here.”

Infrastructure Pillar

The Infrastructure component aims to support AI development by enhancing the physical and technical infrastructure necessary for large-scale data processing.

Key initiatives include:

• Fast-Tracking Permits for Data Centers: Streamlining the approval process to expedite the construction of data facilities.
• Expanding Access to Federal Land: Providing more space for data center development.
• Improving Grid Interconnection for Power Generation: Ensuring reliable and efficient energy supply for data centers.

However, Zezas points out potential challenges, particularly relating to grid capacity, which remains a significant constraint despite executive orders.

“[02:37] A: Infrastructure is another main pillar here... the President's ability to control scaling power capacity is somewhat limited. Many of these policy tools to increase energy production to facilitate more data centers will likely have to be addressed by Congress, especially if any of these policy changes are to be more durable.”

Ariana Salvatore identifies sectors that may benefit from these infrastructure initiatives, specifically highlighting the power and utilities sectors.

“[04:06] B: ...owners of natural gas fired and nuclear power plants. So you should see a tailwind to the power and utilities sector.”

Global Leadership Pillar

The Global Leadership pillar emphasizes the United States' role in the global AI landscape, particularly in the context of rising competition from China.

Key initiatives include:

• Exporting the Full AI Stack: Sharing AI hardware, models, and standards with allied nations.
• Tightening Export Controls on Rivals: Restricting AI-related exports to competitors, with a specific focus on China.

Salvatore elaborates on the strategic framing of AI leadership as a national security priority, advocating for an international alliance based on shared values and open trade.

“[03:09] A: Right. And so it all seems part of a proposal to form an international AI alliance built on shared values and open trade.”

The plan also calls for:

• Embedding US AI Standards in Global Governance Bodies: Influencing international regulations and norms around AI.
• Using Diplomatic Tools to Limit Adversarial Influence: Countering the impact of rival nations in the AI sector.

Zezas emphasizes the uncertainty surrounding the specific standards to be implemented and their potential impact on US industries.

“[03:09] A: ...what exactly are these standards going to be and how that will shape how industry in the US around AI has to behave. Those details are not yet forthcoming.”

Implications for Investors

Ariana Salvatore distills the key takeaways from the AI Action Plan, focusing on its prioritization by the administration and the anticipated market impacts.

“[04:06] B: Yeah. So really, two key takeaways from this document. First of all, AI policy is a priority for the administration... reduction in data center build time and cost benefits, owners of natural gas fired and nuclear power plants. So you should see a tailwind to the power and utilities sector.”

Additionally, the framing of AI as a national security issue suggests a differentiated approach to trade, particularly with China. This could lead to sustained tariffs and influence sector preferences, notably with increased caution in the consumer sector.

“[04:52] A: ...tariff increases globally but with a skew towards China are probably durable. And it's something that we think is reflected in the sector preferences where equity strategy team, for example, with some caution around the consumer sector.”

Zezas and Salvatore both agree on the necessity to monitor the unfolding policy landscape closely, as ongoing developments could significantly influence investment strategies and sector performance.

“[05:16] B: That's right. So plan to watch as this unfolds.”

Conclusion

The episode concludes with the hosts reiterating the importance of understanding the AI Action Plan's provisions and their potential market implications. They encourage listeners to stay informed as the administration's policies evolve and begin to take shape in real-world applications.

“[05:19] A: That's it for today's episode of Thoughts on the Market...”

Final Note: The content discussed is informational and not a substitute for professional financial, legal, or tax advice.

Key Quotes with Timestamps

• Michael Zezas [00:09]: “Today we're diving into the Administration's newly released AI Action Plan, what's in it, what it means for markets, and where the challenges to implementation might lie.”

• Ariana Salvatore [00:56]: “This document is basically the administration signaling how it intends to cement America's role in the global development of AI through a mix of both domestic and global policy initiatives.”

• Ariana Salvatore [01:30]: “So first on the innovation front, the plan calls for removing regulatory barriers to AI development, encouraging open source models, and investing in interpretability and robustness.”

• Michael Zezas [02:37]: “...the President's ability to control scaling power capacity is somewhat limited. Many of these policy tools to increase energy production to facilitate more data centers will likely have to be addressed by Congress, especially if any of these policy changes are to be more durable.”

• Michael Zezas [03:09]: “...what exactly are these standards going to be and how that will shape how industry in the US around AI has to behave. Those details are not yet forthcoming.”

• Ariana Salvatore [04:06]: “...owners of natural gas fired and nuclear power plants. So you should see a tailwind to the power and utilities sector.”

• Michael Zezas [04:52]: “...tariff increases globally but with a skew towards China are probably durable. And it's something that we think is reflected in the sector preferences where equity strategy team, for example, with some caution around the consumer sector.”

• Ariana Salvatore [04:06]: “...the administration is signaling that AI policy is a priority, which could lead to reduced regulatory barriers for data centers and tailwinds for the power and utilities sector.”

This comprehensive summary captures the essence of the episode, outlining the major components of the AI Action Plan and its potential effects on various market sectors. By highlighting key discussions and providing direct quotes with timestamps, this summary serves as a valuable resource for those seeking to understand the intersection of AI policy and market dynamics without listening to the full podcast.