Morgan Stanley Launches Dual-Stock Jump Securities Linked to Broadcom and NVIDIA Performance

Structured Product Overview and Issuer Details

Morgan Stanley Finance LLC, operating under its Series A Global Medium-Term Notes program, issued these Jump Securities with an auto-callable feature on July 23, 2026, following a pricing date of July 20, 2026. The securities are unsecured obligations of MSFL and carry full and unconditional guarantees from Morgan Stanley. Morgan Stanley & Co. LLC, a wholly owned subsidiary of Morgan Stanley, serves as the agent, while J.P. Morgan Securities LLC and JPMorgan Chase Bank, N.A. act as placement agents. Each security carries a stated principal amount of $1,000, with an issue price also set at $1,000 per security. The filing does not disclose the aggregate principal amount offered in this issuance.

The securities represent a complex investment vehicle designed for institutional and sophisticated investors willing to accept principal risk in exchange for potential enhanced returns. The dual-underlier structure means that both Broadcom and NVIDIA stock performance directly influence all payment scenarios. The estimated value of the securities on the pricing date was approximately $979.60 per security, reflecting embedded costs associated with issuance, distribution, structuring, and hedging activities that effectively reduce the economic value below the face amount.

Dual Underlier Structure and Initial Reference Levels

The securities are linked to two common stocks: Broadcom Inc. (ticker AVGO) and NVIDIA Corporation (ticker NVDA), establishing what the filing describes as a "worst performing" underlier mechanism. The strike date for establishing initial levels was July 17, 2026. The AVGO Stock had an initial level (closing price on strike date) of $370.825, while the NVDA Stock initial level was $202.81. These reference prices form the baseline against which all subsequent performance calculations are measured throughout the two-year term.

The use of multiple underliers does not provide portfolio diversification benefits. Rather, the securities track performance based on whichever stock performs worst relative to its initial level. This worst-performing underlier approach creates asymmetric risk exposure, as a significant decline in either stock—regardless of the other's performance—determines the ultimate investor return. The filing explicitly states that this structure means "a decline in the level of either underlier beyond its downside threshold level will adversely affect your return on the securities, even if the other underlier has appreciated or has not declined as much."

Automatic Early Redemption and Call Threshold Mechanics

The securities incorporate an automatic early redemption feature that activates if specific market conditions are met on the first determination date, scheduled for July 30, 2027. For early redemption to occur, the closing level of each underlying stock must be at or above its respective call threshold level. For AVGO Stock, the call threshold is $370.825, representing 100 percent of its initial level. For NVDA Stock, the call threshold is $202.81, also representing 100 percent of its initial level. If both conditions are satisfied on the first determination date, the securities automatically redeem on the early redemption date of August 4, 2027, with no further payments made to investors thereafter.

Upon automatic early redemption, investors receive the early redemption payment of $1,545.10 per security. This payment amount represents a 54.51 percent total return over approximately one year, contingent solely on both stocks maintaining or exceeding their initial price levels by the determination date. The automatic redemption mechanism removes further market exposure once triggered, providing a defined exit point for successful performance scenarios. However, if either stock closes below its call threshold on July 30, 2027, the automatic redemption does not occur, and the securities continue to maturity with different payment structures applicable.

Maturity Payment Scenarios and Return Structure

At maturity on July 20, 2028, investors receive payments determined by the final closing levels of both underlying stocks on the final determination date (July 17, 2028). The filing outlines three distinct payment scenarios. First, if the final level of each underlier is greater than its initial level, investors receive the stated principal amount plus an upside payment calculated using a participation rate of 300 percent applied to the worst-performing underlier's percentage change. This scenario delivers leverage on the positive performance of the stock that appreciates least.

The second scenario applies when the final level of at least one underlier is at or below its initial level, but both underliers remain at or above their downside threshold levels. In this case, investors receive only the stated principal amount of $1,000 with no upside or downside adjustment. The third scenario, triggering the most significant losses, occurs when the final level of either underlier falls below its downside threshold. Under this circumstance, the payment formula uses a performance factor based on the worst-performing stock's final level divided by its initial level, with results multiplied against the stated principal amount, potentially resulting in recovery significantly below principal.

Downside Threshold Levels and Loss Mechanics

Both underlying stocks have established downside threshold levels representing 60 percent of their respective initial levels. For AVGO Stock, the downside threshold level is $222.495, calculated as 60 percent of the $370.825 initial level. For NVDA Stock, the downside threshold level is $121.686, calculated as 60 percent of the $202.81 initial level. These thresholds define the boundary between return of principal and principal loss scenarios.

The filing explicitly states that if the final level of either underlier falls below its downside threshold level, "the payment at maturity will be significantly less than the stated principal amount and could be zero." The performance factor mechanism ensures that losses compound with the magnitude of decline in the worst-performing stock. For example, if the worst-performing underlier declines from its initial level to 30 percent of that level (a 70 percent decline), the payment would equal the stated principal amount multiplied by 0.30, resulting in recovery of only $300 per security and a $700 loss on each $1,000 investment.

Pricing, Commissions, and Economic Costs

The original issue price for each security was set at $1,000. Morgan Stanley & Co., acting as agent, receives commissions and fees of $15 per $1,000 stated principal amount, with net proceeds to Morgan Stanley Finance LLC equal to $985 per security. J.P. Morgan Securities LLC and JPMorgan Chase Bank, N.A. serve as placement agents and will forgo fees for sales to certain fiduciary accounts, with the $15 per security figure representing fees from non-fiduciary account sales.

The estimated value of the securities on the pricing date was approximately $979.60 per security, with the filing noting this estimate could be within $25 of that figure. This valuation gap between the $1,000 issue price and the $979.60 estimated value reflects the embedded costs of structuring, hedging, and distribution. Investors purchasing at face value immediately experience a paper loss representing the difference between the purchase price and the fair value estimate, a cost structure inherent to structured products of this type.

Credit Risk and Guarantor Obligations

The securities represent unsecured obligations of Morgan Stanley Finance LLC, backed by the full and unconditional guarantee of Morgan Stanley. All payments, including automatic early redemption payments and maturity payments, are subject to Morgan Stanley's credit risk. The filing explicitly states that "if we default on our obligations, you could lose some or all of your investment." These securities are not secured obligations, and investors hold no security interest in or access to any underlying reference assets. The guarantor's creditworthiness directly determines the ultimate credit quality of the investment.

Investors bear dual risk: the performance risk tied to both Broadcom and NVIDIA stock movements, and the credit risk associated with Morgan Stanley's financial condition. Even if both underlying stocks perform favorably, investors remain exposed to Morgan Stanley default risk. Conversely, even if underlying stocks decline significantly, investors' losses might be further compounded if Morgan Stanley's credit condition deteriorates. The filing notes that securities are "not deposits or savings accounts and are not insured by the Federal Deposit Insurance Corporation or any other governmental agency or instrumentality, nor are they obligations of, or guaranteed by, a bank."

Risk Characteristics and Investor Suitability Considerations

The filing emphasizes that these securities involve risks not associated with ordinary debt investments. The securities are designed for "investors who are willing to risk their principal and forgo current income in exchange for the possibility of receiving an early redemption payment or payment at maturity that exceeds the stated principal amount." Notably, the securities provide no regular interest payments; all returns depend entirely on stock price performance and either early redemption or maturity payment events.

The worst-performing underlier mechanism creates concentrated downside exposure. Even if one stock performs well, poor performance by the other determines overall returns. The filing cautions that "the fact that the securities are linked to more than one underlier does not provide any asset diversification benefits and instead means that a decline in the level of either underlier beyond its downside threshold level will adversely affect your return on the securities." Investors must accept the possibility of losing their entire initial investment based on the combined performance of both Broadcom and NVIDIA stocks over a two-year period.

Registration and Regulatory Framework

The securities were filed pursuant to Rule 424(b)(2) under the Securities Act, with registration statement numbers 333-293641 and 333-293641-01. This preliminary pricing supplement (No. 17,505) was dated July 20, 2026, representing the initial disclosure document before final pricing details were confirmed. The CUSIP for the securities is 61781GP62, and the ISIN is US61781GP626. These identification numbers facilitate trading and settlement if secondary market transactions occur.

The offering documents reference accompanying product supplement dated April 8, 2026, a tax supplement dated April 8, 2026, and a prospectus dated April 8, 2026. These documents provide detailed legal terms, tax implications, and risk disclosures beyond the scope of this preliminary pricing supplement. The securities will not be listed on any securities exchange, limiting secondary market liquidity and creating potential challenges for investors seeking to exit positions prior to maturity.

Term Duration and Key Dates

The securities have a two-year term, with the original issue date of July 23, 2026 and final maturity date of July 20, 2028. The final determination date for assessing maturity payments is July 17, 2028, subject to postponement for non-trading days and certain market disruption events. All determination dates remain subject to adjustment if the specified dates fall on non-trading days or if certain market disruptions occur, with specific adjustment mechanisms detailed in the product supplement.

The initial opportunity for early redemption occurs at the first determination date of July 30, 2027, approximately one year following issuance. If early redemption is triggered at that point, investors receive proceeds approximately thirteen months before scheduled maturity. If early redemption does not occur, investors remain committed to holding the securities for the full two-year period, subject to whatever credit and market conditions prevail at maturity. The filing notes that the initial level prices ($370.825 for AVGO and $202.81 for NVDA) were established on the strike date of July 17, 2026, three days before pricing.