Microsoft remains the clear GenAI beneficiary: Morgan Stanley

Investing.com -- Morgan Stanley told investors in a note that Microsoft “remains the clearest beneficiary of GenAI spend” as corporate technology budgets continue to prioritise artificial intelligence, digital transformation, and cloud computing.

In its 3Q25 CIO survey, Morgan Stanley reported that “Microsoft remains best positioned to capture incremental share of GenAI spend and IT budgets as workloads move to the cloud.”

The bank said the company’s leadership is underpinned by its “strong alignment to key secular themes and CIO priorities, deep integrations across the software ecosystem, vast scope of products to monetise Generative AI, and significant and increasing AI infrastructure investments.”

According to the survey,“33% of CIOs expect Microsoft to gain the largest incremental share of GenAI spend in 2025, more than double the next highest vendor.

Meanwhile, over the next three years, 37% are said to expect Microsoft to gain the largest incremental share.

The bank added that Microsoft also remains the top IT wallet share gainer, with “a net +42% expecting share gains, up from +41% in our prior survey.”

Azure continues to lead in public cloud growth, with CIOs expecting it to be the fastest-growing hyperscaler in 2025.

Morgan Stanley said Microsoft is “well positioned for both growth and defence,” citing its strong exposure to AI, security, and cloud priorities.

The analysts reiterated an Overweight rating, calling Microsoft their “Top Pick in large-cap software,” adding that “valuation is still at a discount to peers.”

Overall, Morgan Stanley said Microsoft’s scale and ecosystem “translate to a higher lifetime value and stronger economics over the long-run.”

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