Morgan Stanley said earlier this week that tech stocks still have plenty of upside. The company cited a number of companies that it says are well positioned following their latest quarterly earnings reports. CNBC Pro has combed through Morgan Stanley's research to find its favorite Overweight-rated stocks based on the latest results and latest forecasts. They include Spotify, Apple, Alphabet, and Microsoft. Alphabet: The internet search giant is “fully committed,” according to the company. Analyst Brian Nowak called the April 25 earnings report “remarkably strong.” He said, “GOOGL's first quarter revenue and EBIT growth demonstrates the sustainability of core growth and management's early success in permanently redesigning its cost base.” . Additionally, YouTube's growth is accelerating and advances in artificial intelligence are becoming more noticeable, which will only get better in the future. “We think GOOGL's AI positioning is improving and investors are starting to recognize that,” he said. The company also raised its price target from $165 to $195 per share, about 17% above Friday's price. “There remains a clear set of catalysts that can build further confidence in GOOGL's AI position and long-term growth sustainability in the coming months,” Nowak said. The stock is up more than 19% this year. Microsoft is “winning with AI,” analyst Keith Weiss said following the tech giant's quarterly results. The company recently reported solid revenue and bottom line growth, with strong third-quarter guidance from Wyeth Inc., which wrote that the best is yet to come for Microsoft. The stock is up 33% over the past 12 months, so there's still plenty of room to play. Especially “Sustainability of EPS growth” [is] “It's not reflected in the stock price yet,” he added. But what makes the company most excited about this stock is its position as a leader in the AI space. A recent Morgan Stanley research study shows that AI is not yet impacting enterprise IT budgets. As spending on AI increases, Microsoft is well-positioned to capture market share: “The AI innovation cycle is just beginning and we see ample path to growth,” he said. He succinctly stated that giant Spotify's stock is too attractive to ignore. The company said its strong earnings report in late April, with strong sales and bottom lines, shows the bull market is alive and well, analyst Benjamin Swinburne said. The key upside surprise comes from gross margins. Spotify has leveraged across music, podcasting and other revenue costs,” Swinburne said, adding that Spotify has “a great product and untapped potential. “pricing power'' and “these factors would lead to an underestimation of earnings power.'' It's an advertising opportunity that doesn't get enough attention from investors. The company's stock is up 57%, and Swinburne raised his price target from $350 to $370 per share. “I’m back in black,” he exclaimed. Spotify “Back in Black. These results and outlook support our bullish view – a) music is cheap and at the beginning of a re-pricing cycle, and b) Spotify has a long road to growth. With runway, superior products and untapped pricing power, &c) these factors lead to an underestimation of earnings power…The main upside surprise this quarter is that Spotify has expanded its music, podcasting , and leveraged across other revenue costs, Microsoft says it has “won in AI. …The AI innovation cycle is just beginning, and there is plenty of room for growth. … The bottom line is that even in a conservative base case, Microsoft is positioned to sustain a 16% EPS CAGR through FY29, but the sustainability of EPS growth is at a premium of 28x CY25 GAAP EPS today. AAPL beats Q Street in June, eases concerns over Chinese-made iPhones, services chief and GM reach all-time high. [gross margin] It set a record, approved the largest stock buyback in history, and hinted at an announcement of Gen AI in the coming weeks. After that, we have no choice but to become even more bullish. … After Apple reveals its largest incremental share buyback authorization in history, we see share buybacks increasing to $23 billion to $25 billion per quarter. … We think GOOGL's AI positioning is improving and investors are starting to recognize it. … A clear set of catalysts remains that could build further confidence in GOOGL's AI position and long-term growth sustainability in the coming months. ”
