Morgan Stanley: The market’s pessimism toward the software industry is overblown, with Microsoft and Palo Alto Networks highlighted as overweight picks

Glonghui, July 23rd | A Morgan Stanley research report points out that the market’s recent pessimism toward the software industry has been excessive. While the AI wave has concentrated market capital into chips, cloud infrastructure, and network security, software companies’ long-term competitiveness and business models remain attractive. Morgan Stanley maintains its positive outlook on the software industry and highlights a certain exchange as the most confident overweight target for the AI era. In his latest report, Morgan Stanley analyst Adam Wood introduces the Moat & Journey analysis framework, assessing software companies’ long-term growth potential and competitive advantages from two perspectives: corporate competitive moat and the AI development journey. He believes the above eight companies possess solid market positions, sustainable revenue models, and capabilities for AI commercialization, making them the most worthy for long-term investment portfolios.