Morgan Stanley: AI Continues to Drive Tech Sector Buying Opportunities

Morgan Stanley strategists note that despite recent volatility, U.S. technology stocks remain attractive as AI-driven demand and enterprise sales outlooks support earnings and growth. The bank argues that large tech companies now trade at multi-decade high earnings growth expectations, while software stocks' recent corrections present opportunities for Microsoft (MSFT-US) and Intuit (INTU-US). Michael Wilson's team highlights that AI's supply-side fundamentals remain intact, and the market has yet to fully price the growth from AI application spending. The "Magnificent Seven" index trades at about 29x earnings, slightly below the five-year average, with some逢低 buying evident but Nasdaq 100 futures down 0.7% on Monday. They emphasize CAPEX-relative-to-sales stocks continue outperforming, and companies integrating AI into core operations outperform broad-market peers by roughly 1% in the next trading day. Weaker dollars also benefit the sector, as roughly half of the Nasdaq 100's revenue is international, with broader upside in semiconductors, software, and hardware expected.