Morgan Stanley: Technology Stocks Targeted at Record Highs

Positive Forecast for Technology Stocks from Morgan Stanley

Michael Wilson and his strategy team announced that revenue growth expectations for major technology stocks have reached their highest levels in the last decade. However, the recent decline in valuations during market fluctuations is noteworthy. The pullback in software stocks, in particular, has created attractive entry points in well-known companies like Microsoft and Intuit.

A.I.-Driven Growth Continues

Wilson shared an important point for investors: "Periods like last week are not commonly seen in large investment cycles. Still, we believe that the AI-supportive dynamics are continuing in the background and that opportunities for adoption in this area have yet to be fully realized."

Activity in the Nasdaq 100

Nasdaq 100 experienced its largest weekly decline since December, while stocks affected by AI also lost value following the launch of a new tool. The Bloomberg Magnificent 7 index is currently trading at about 29 times forward earnings, slightly below the five-year average.

Effects of Currency and Technology Stocks

The strategy team noted that approximately 50% of the revenues of Nasdaq 100 companies come from international markets, and they expect the weakening of the dollar to have a positive impact on these stocks. Additionally, a recovery in earnings forecasts for the "Magnificent Seven" stocks is anticipated, alongside chips, software, and technology hardware.