Morgan Stanley analysts maintained Overweight-rated Microsoft (NASDAQ:MSFT) as a top pick at the firm in a note Tuesday following the firm's CIO survey.
The analysts also maintained a $415 price target on the stock, and told investors that Microsoft "appears uniquely well aligned to several key emerging themes."
They also stated that the tech powerhouse is in pole position as the Generative AI race begins, while it also possesses "leverage to demand through consumption revenues."
"Macro headwinds remain, but Microsoft has compelling positioning for emerging secular themes," the analysts wrote. "Although CIO's 2023 software budget growth expectations moderated to ~3.1% (down from ~3.4% in prior quarter), several forward looking indicators in the CIO survey support Microsoft's strong relative positioning within those muted CY23 budgets growth expectations, including Microsoft being the only software vendor in our survey for which forward growth expectations actually improved sequentially in our survey."
They also explained that Microsoft is "the most compelling expression of two key themes emerging" from the firm's latest research. These are the scope to monetize Generative AI across its broad portfolio and the leverage to consumption pricing (via its Azure Cloud business), enabling investors to see any pick-up in demand earlier.