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Why Microsoft Stock Is Surging Today
Key Points
Microsoft's valuation is moving higher after Morgan Stanley outlined a bullish forecast for the company's cloud businesses.
Microsoft looks poised to benefit from a new partnership between Dell and the Department of Defense.
A recent report also suggests the company is poised to debut new AI applications next week.
Microsoft (NASDAQ: MSFT) stock is seeing significant bullish momentum in Thursday's trading. The tech giant's share price was up 3.4% as of 3:05 p.m. ET. The S&P 500 and the Nasdaq Composite were up 0.5% and 0.6%, respectively, at the same point in the day's trading. The stock has been up as much as 4.1% earlier in the daily session.
Microsoft is gaining ground today in response to positive analyst coverage of the company's cloud infrastructure opportunities, potential opportunities in the defense services space, and reports that the company is poised to unveil a new coding model in the near future. Despite the gains for the stock, its share price is still down roughly 12% year to date as of this writing.
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Morgan Stanley sees strong growth tailwinds for Microsoft's cloud unit
In a note published yesterday, Morgan Stanley analysts laid out a bullish growth trajectory for Microsoft's cloud infrastructure business. The investment firm's team sees Microsoft rapidly expanding its data center capacity and expects that monetization will scale rapidly as the new systems come online. With the tech giant expanding its artificial intelligence (AI) and cloud infrastructure data center footprint and the demand for compute surging, Morgan Stanley's analysts think Microsoft could see much stronger monetization in the near future.
Defense-related news and new coding software are also lifting the stock
News hit today that Dell had been awarded a contract through the Department of Defense that's expected to be worth roughly $9.69 billion. Through the deal, department customers and related parties will be able to secure access to Microsoft software licenses, cloud services, and other offerings.
In addition to that bullish catalyst, The Information also published a report today suggesting that Microsoft is poised to unveil several AI applications at its Build conference next week. One of these new applications is reported to be a new coding model. If Microsoft's new coding model can help the company regain competitive ground against Anthropic in the space, it would be a majorly positive development for the company.
Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Microsoft. The Motley Fool has a disclosure policy.