Microsoft Has More Upside as AI Expands, Morgan Stanley Says

Microsoft Corp. (MSFT, Financials) remains Morgan Stanley's top pick, with analysts saying the company's artificial intelligence strategy is starting to take hold and could fuel more upside.

The firm said Microsoft's early lead in AI tools, including integration across its Office and cloud platforms, is helping set the stage for stronger growth. It pointed to signs that customer adoption is beginning to show up in revenue, and that the stock still has room to climb despite recent gains.

Microsoft has been among the largest beneficiaries of AI enthusiasm in markets this year, with shares outperforming the broader tech sector. Morgan Stanley's call reflects confidence that the company can turn that momentum into sustained earnings growth.

The stock was little changed in premarket trading Friday. Investors will next look to Microsoft's upcoming earnings report for more evidence of how quickly AI is translating into financial results.