After the sell-off in the software sector, Morgan Stanley recommends nine established tech companies that are currently valued as cheaply as they were recently during the cloud crisis.
• Morgan Stanley recommends nine AI stocks
• Software ratings at all-time lows
• Generative AI could bring $400 billion market
After the significant sell-off in the technology sector, Morgan Stanley strategists see new entry opportunities in selected software stocks. According to investing.com, the US investment bank currently recommends nine large AI stocks and speaks of attractive valuations after a massive decline in relation to sales. The focus is on established tech companies that, despite short-term uncertainty, could benefit greatly from generative artificial intelligence in the long term. The AI top dog NVIDIA is surprisingly left out.
Correction in the software sector: valuations plummeted
As investing.com reports in a post from February 2nd, Morgan Stanley analyst Keith Weiss points to a significant correction in the software sector: In a note to clients on Monday, he wrote that “peak uncertainty has severely impacted software multiples,” with a decline of around 33 percent since October 2025.
In addition, the valuation level has now fallen back to a historically low level. With an average enterprise value of only about 4.4 times sales, software stocks have fallen back to valuation levels last reached during the peak of uncertainty surrounding cloud businesses, it said.
From the perspective of analysts, current concerns about generative AI are overblown. Above all, investors would underestimate the strength of existing market leaders. According to the note, cited by investing.com, “the bear case arguments surrounding GenAI appear to give too little credence to the ability of incumbent software vendors to participate in this innovation cycle.”
Away from NVIDIA: Morgan Stanley sees opportunities in the AI sector
According to investing.com, Morgan Stanley highlights Microsoft, Intuit, Salesforce, ServiceNow, Atlassian, Snowflake, Cloudflare, Shopify and Palo Alto Networks as particularly attractive “buy the dip” candidates. According to analysts, these companies combine strong product cycles with improving financial metrics and currently discounted valuations – a combination that appears particularly promising in an increasingly AI-driven market environment. The bank cites strong product cycles, improving financial indicators and significantly more favorable valuations as reasons.
Microsoft is described as “a clear participant in the most important innovation cycles”. Morgan Stanley describes Intuit’s valuation as “very attractive.” According to the analyst firm, Salesforce was recently able to score points with strong growth: AI-related annual recurring revenue increased by 114 percent compared to the previous year. Shopify also impresses the experts. The e-commerce specialist is considered “best positioned to capture more than its fair share of a growing online retail pie.”
Generative AI as a $400 billion opportunity
Despite short-term volatility, Morgan Stanley remains bullish on the AI sector in the long term. According to investing.com, the bank estimates that generative AI could add around $400 billion to the total addressable enterprise software market by 2028.
The current weak phase could turn out to be a classic “buy the dip” opportunity for investors – especially for established software providers with a clear AI strategy and solid business models. However, as is often the case, it remains to be seen whether the experts are right.
Bettina Schneider / editorial team finanzen.net
This text is for informational purposes only and does not constitute an investment recommendation. finanzen.net GmbH excludes any claims for recourse.
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