Morgan Stanley Launches $1 Million Auto-Callable Notes Linked to KLA Corporation Stock with 39.20% Contingent Coupon

Investment Structure and Contingent Coupon Details

These structured securities from Morgan Stanley Finance LLC link investor returns directly to KLA Corporation common stock price performance. Investors have the opportunity to earn a 39.20% annual contingent coupon, an above-market yield compared to traditional fixed-income products. However, this enhanced yield carries substantial risk, including the possibility of losing a significant portion or all of the initial principal if the underlying stock declines.

The contingent coupon is paid only if KLA stock closes at or above $109.519 (50% of the initial stock price set on July 16, 2026) on specified observation dates during the term. If the stock closes below this coupon barrier on any observation date, no coupon is paid for that period. Unpaid coupons may be carried forward and paid on subsequent dates if the stock meets the threshold. If the stock never recovers to the coupon barrier through maturity, no coupon payments will be made for those periods.

Automatic Early Redemption Feature and Call Threshold

These securities include an automatic early redemption mechanism starting October 29, 2026. On any redemption determination date—October 29, 2026; January 29, 2027; or April 29, 2027—if KLA stock closes at or above $219.038 (100% of the initial level), the securities will be redeemed early on the corresponding redemption date.

Upon early redemption, investors receive the stated principal plus the contingent coupon for the related period and any previously unpaid coupons. No further payments are made after redemption. This feature allows investors to exit early with full principal and accrued coupons if KLA stock performs well but limits upside participation beyond the call threshold.

Maturity Payment and Principal-at-Risk Downside Threshold

If not redeemed early, at maturity on August 3, 2027, payments depend on KLA stock’s final closing price relative to the downside threshold. If the final level is at or above this threshold, investors receive the $1,000 stated principal plus applicable coupons. The specific downside threshold value is not disclosed in the excerpt.

If the final stock price falls below the downside threshold, investors incur principal losses equal to 1% for every 1% decline in stock price, potentially losing their entire principal. This exposes investors to full downside risk beyond the threshold with no principal protection.

Pricing and Agent Commissions

The securities were priced at $1,000 each on July 17, 2026, with an original issue date of July 22, 2026. The estimated value at pricing was $984.20 per security, reflecting a $15.80 discount due to embedded options and risk. Morgan Stanley & Co. LLC acts as agent for the offering.

Agent commissions and fees total $10 per security, resulting in net proceeds of $990 per security to the issuer. On the $1,000,000 issuance, total commissions amount to $10,000. J.P. Morgan Securities LLC and JPMorgan Chase Bank, N.A. serve as placement agents, waiving fees for certain fiduciary accounts; fees for other accounts do not exceed $10 per $1,000 principal.

Observation Dates and Coupon Payment Schedule

Observation dates determine contingent coupon payments and early redemption eligibility, with the final observation on July 29, 2027. Dates may be postponed for non-trading days or market disruptions. Coupon payments occur the next business day if observation dates fall on non-business days, with no adjustment to coupon amounts.

Redemption determination dates are October 29, 2026; January 29, 2027; and April 29, 2027. The final coupon payment is made on maturity, combined with any maturity payment due.

Credit Risk and Guarantee Structure

These unsecured securities are obligations of Morgan Stanley Finance LLC, guaranteed unconditionally by Morgan Stanley. Payments depend on Morgan Stanley’s creditworthiness, exposing investors to counterparty risk. They do not provide security interests in the underlying KLA stock or related assets.

This structure layers risk from both the contingent coupon/principal-at-risk design linked to KLA stock and Morgan Stanley’s credit risk. The securities are issued under Morgan Stanley Finance LLC’s Series A Global Medium-Term Notes program.

Suitability and Risk Considerations

Designed for investors seeking above-market interest rates and willing to accept substantial risk, these securities do not guarantee principal repayment or regular interest. Coupons depend entirely on KLA stock meeting price thresholds.

Investors will not benefit from stock appreciation beyond the $219.038 call threshold, as securities will be redeemed early if this level is reached. The product is suitable only for investors with high risk tolerance who understand the possibility of no coupon payments and significant or total principal loss.

Regulatory Filings and Securities Classification

The pricing supplement was filed under Rule 424(b)(2) with registration numbers 333-293641 and 333-293641-01, dated July 17, 2026. The SEC and state regulators have neither approved nor disapproved these securities nor verified the offering documents’ accuracy.

These principal-at-risk structured notes differ from traditional debt securities. Investors should review the product supplement, tax supplement, and prospectus dated April 8, 2026, for full terms, conditions, risk factors, distribution plans, and conflicts of interest, including Morgan Stanley & Co. LLC’s dual role as agent and affiliate.

Market Disruption Provisions and Valuation Insights

Market disruption events may postpone observation and redemption dates to ensure fair stock price determinations. The estimated $984.20 value at pricing reflects option features and credit risk, differing from the $1,000 issue price due to embedded contingent coupon and principal-at-risk elements.

Investors should understand this valuation discount accounts for coupon payment probabilities and potential principal loss scenarios based on KLA stock price movements.