Morgan Stanley’s Top Software Pick for 2026 is a Great Value Buy

Core Viewpoint - Microsoft is positioned as a leading player in the AI revolution, with expectations for significant growth and margin expansion in 2026, particularly through its Azure platform [2][4]. Group 1: Microsoft’s Market Position - Microsoft shares are currently down approximately 12% from their all-time highs of just over $542 per share, indicating a potential buying opportunity as the stock enters 2026 [3][6]. - Morgan Stanley has set a price target of $650 for Microsoft, suggesting an upside of over 35% from current levels, making it an attractive investment option [4][6]. Group 2: AI and Azure Potential - The growth potential of Azure, particularly in AI, is seen as a key driver for Microsoft's future performance, with expectations for margin gains that could lead to significant earnings growth [5][6]. - Increased adoption of AI technologies alongside higher margins could create a favorable environment for Microsoft to exceed market expectations in the upcoming quarters [5].