10:58 AM EDT, 07/15/2024 (MT Newswires) -- Microsoft ( MSFT ) likely saw "solid" demand trends in its fiscal Q4, though concerns around the timing of contribution from generative artificial intelligence remain an overhang on the stock, Morgan Stanley said Monday.

It expects the technology giant to report fiscal Q4 non-GAAP earnings of $2.86 per share on revenue of $64.14 billion. The market consensus is for $2.93 and $64.39 billion, respectively.

"We remain confident in the magnitude of upside to forward estimates driven by core IT budget spending intentions pushing more share to Microsoft ( MSFT ), as well as the GenAI monetization ramp given the company's strong early positioning, but addressing the latter is increasingly more important to the go-forward debate and could determine how investors judge further investments behind the GenAI opportunity," Morgan Stanley said in a note to clients.

Morgan Stanley reiterated its overweight rating on the Microsoft ( MSFT ) stock, with a $520 price target.

"The qualitative commentary around GenAI timing will likely be a greater swing factor this quarter compared to prior quarters given the heightened debate on return on investment," the report said.

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