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Morgan Stanley sees buying opportunity in Microsoft

Published 04/17/2023, 09:48 AM
Updated 04/17/2023, 09:51 AM
© Reuters.  Morgan Stanley sees buying opportunity in Microsoft (MSFT)

By Sam Boughedda

Morgan Stanley analysts told investors in a note Monday that the firm sees a buying opportunity in Microsoft (NASDAQ:MSFT).

"Microsoft consistently screens as best positioned to gain market share, we see a buying opportunity," stated the analysts, who reiterated an Overweight rating and $307 price target on MSFT shares.

Microsoft shares are up more than 1% so far in today's session, boosted by reports that Samsung (KS:005930) is mulling replacing Google (NASDAQ:GOOGL) with Microsoft's Bing as the default search engine on its devices.

In their preview of Microsoft's latest quarter, the analysts revealed that for the tech giant, the latest AlphaWise survey showed it is best positioned to gain market share of IT budgets overall. In addition, Microsoft and Google are expected to be the major beneficiaries of AI.

"AI as a % of cloud spend is set to increase meaningfully over the next three years from 3% to 9%, and importantly Microsoft is most frequently cited as the largest share gainer of AI/ML spending this year and in the next 3 years," the analysts wrote.

As one of the leaders in AI, the analysts stated that the opportunity "goes well beyond Search and even well beyond Azure's AI services."

"Microsoft is uniquely positioned, in our view, given its partnership with OpenAI, its vast installed bases and data sets, and existing solutions across most areas of software, to lead in the rollout of monetizable capabilities across its portfolio," they explained. "In turn, these dynamics translate to earlier training and improvement of AI models for Microsoft, expanding its mind share and market share lead."

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