Morgan Stanley Sees Opportunity in Software Stocks Amid AI Disruption

Analysts highlight Microsoft as a strong buy, but are more cautious on Salesforce

Published on Feb. 9, 2026

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The recent turbulence in enterprise software stocks has sparked debate about the impact of artificial intelligence (AI) on the industry. Morgan Stanley believes the current dip presents 'attractive entry points' for investors, specifically highlighting Microsoft and Salesforce. However, concerns remain around AI's potential to disrupt traditional software models through increased efficiency and the ability to generate code.

Why it matters

The software industry is grappling with the implications of AI, which could both challenge existing business models and validate the value of effective software solutions. Investors are closely watching how leading companies like Microsoft and Salesforce adapt to these changes.

The details

Morgan Stanley analysts argue that while AI could improve worker productivity, it may also prompt companies to adapt their pricing models rather than signaling an existential threat. Regarding the threat of AI-generated code, the firm points out that the decision to build software internally versus purchasing it is complex, and the existence of open-source software for 20 years hasn't eliminated the need for third-party software solutions.

  • Morgan Stanley's fourth-quarter 2025 CIO Survey indicates expectations of software spending growth to rise from 3.7% in 2025 to 3.8% in 2026.
  • CIOs anticipate 7.3% growth for Microsoft in 2026, a 100 basis point increase from the second-quarter 2025 survey.

The players

Microsoft

The world's second-largest cloud provider, with strength in traditional software suites like Office. Morgan Stanley maintains an 'Overweight' rating on Microsoft with a price target of $650.

Salesforce

The outlook for Salesforce is more cautious, with concerns about shrinking price-to-earnings multiples and challenges in integrating AI into its business model.

Satya Nadella

The CEO of Microsoft, who is expected to deliver on investor expectations for Azure's growth.

Amy Hood

The CFO of Microsoft, who is expected to deliver on investor expectations for Azure's growth.

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What they’re saying

“We must not let individuals continue to damage private property in San Francisco.”

— Robert Jenkins, San Francisco resident (San Francisco Chronicle)

The takeaway

The future of software is undoubtedly intertwined with AI. While uncertainties remain, the current market dip may present a strategic opportunity for investors willing to navigate the evolving landscape and identify companies that can adapt to the challenges and opportunities presented by this transformative technology.