Morgan Stanley Bullish on Microsoft Amid Software Spending Growth

Morgan Stanley analysts have initiated an overweight rating on Microsoft (MSFT) with a $650 price target, projecting a 38% upside. The optimism stems from anticipated growth in corporate software spending, expected to rise to 3.8% in 2026 from 3.7% in 2025. CIOs forecast Microsoft’s revenue growth at 7.3% for the year.

Despite a 4% decline in MSFT shares since January, the firm sees the dip as temporary. Microsoft’s AI investments, including a new Michigan data center, initially boosted sentiment before energy cost concerns triggered a pullback. The stock currently trades below its 200-day moving average.

Wall Street consensus aligns with the bullish outlook, with Wedbush dubbing Microsoft a 'core winner' for 2026. The company’s dual leverage on enterprise software trends and AI infrastructure positions it for outperformance.