Morgan Stanley finds that rising prices, while a headache for every company, can force accelerated investment in technology to boost productivity, and that some innovative companies will benefit greatly. best. The Wall Street firm believes that persistent inflation in sectors such as labor and energy will give rise to investment that shifts across sectors. The bank says many of these technologies, such as automation and clean energy, are inherently deflationary. “In an inflationary world, we believe that companies that have developed deflationary products/services will become increasingly valuable,” said Joshua Pokrzywinski, equity analyst at Morgan Stanley. in a note. “Cost pressures will prompt companies to accelerate investments in automation and productivity-enhancing technologies.” Deflationary Forces Renowned investor Cathie Wood also follows this school of thought about deflationary forces taking hold. She has been going against inflation for a while, calling for deflation with ongoing innovation trends. Recently, the innovation-focused investor highlighted several leading indicators that show deflationary forces instead of inflation, such as the rising dollar, falling oil prices, and gold’s muted action. Ark Invest’s Wood believes inflation will quickly ease over the next few months as inventory issues are resolved. For investors looking to bet on this deflationary trend, Morgan Stanley has put together a shopping list of “deflationary factors” across a variety of sectors and industries. Opportunities in Many Industries The Wall Street Company believes the auto industry will continue to see technological changes that drive structural deflation in terms of total cost of ownership and the increased distance traveled. Morgan Stanley says companies like Tesla, XPO, ArcBest are among the best positioned for this change in the auto and mobility industries. Meanwhile, the bank said that deflation in clean energy continues to be underestimated and investors should consider key players such as AES, Plug Power and Sunrun. “The energy transition will be a long and delicate trade-off – and ultimately potentially high inflation,” the bank said. “This will lead to more investment in deflationary tools in the energy segment, on which the global economy continues to be fully dependent.” There is also a wide range of software names that could benefit from this deflationary trend as more companies upgrade their infrastructure to reduce costs and improve productivity. Some of these software names include Salesforce, ServiceNow, UI Path, Autodesk, and Microsoft. – Michael Bloom of CNBC contributed to this report.