Microsoft (MSFT) will be a major beneficiary of incremental AI spending, according to a survey of chief information officers cited by Morgan Stanley in a Friday note.
Morgan Stanley continues to see opportunity in Microsoft despite investor impatience with its topline results. “We continue to see room for further expansion,” according to the note.
Particularly promising are Microsoft’s Azure, with the survey indicating that a net 39% of chief information officers expect to see Microsoft as the top AI budget share winner in 2024, Morgan Stanley added.
Microsoft’s 365 Copilot is projected to contribute $5 billion to revenue in fiscal 2025, Morgan Stanley estimates, and $23 billion by fiscal 2029.
While upcoming Q3 results will give investors some key data points on Azure growth, the other aspects of the Generative AI impact on Microsoft need several more business cycles. Still, Morgan Stanley sees Microsoft “positioned to sustain a 14% five-year revenue CAGR, nearly doubling the size of the company.”
Microsoft is expected to report its fiscal Q3 results on April 25.
Morgan Stanley maintained its overweight rating and $520 price target on Microsoft stock.