"Sometimes, the best value picks are the ones that have been hiding in plain sight all along. And while Morgan Stanley has more than a handful of top picks for the new year, I do find that one of its top large-cap software picks for 2026 to be intriguing but not at all surprising. Undoubtedly, shares of Microsoft ( NASDAQ:MSFT) are a favored pick by many big-name pundits and investors for the new year, and it's no mystery as to why."
"It's one of the leading big forces as the AI revolution enters yet another year, one that could show greater applicability and, with that, monetization potential. Of course, Microsoft Copilot hasn't yet lived up to its full potential. And while Microsoft's AI might have more than its fair share of critics, I do think 2026 is a year where Microsoft can impress, delight, and perhaps silence the skeptics as the firm looks to level up its AI game meaningfully."
Morgan Stanley rates Microsoft as a top large-cap software pick for 2026 and assigns a $650 price target implying roughly 35% upside from current levels. Microsoft stands as a leading force in the AI revolution with Azure expansion and enterprise AI monetization potential. Microsoft Copilot has not yet reached full potential, but 2026 could deliver meaningful AI improvements and margin gains. Microsoft shares are approximately 12% below last year's highs and have slipped into correction territory even as the S&P 500 posts new highs. Azure growth, AI deployment, and margin improvement underpin the bullish thesis.
Read at 24/7 Wall St.
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