Morgan Stanley analysts are recommending investors buy nine major software stocks that have been heavily impacted by AI-related market volatility, arguing that current valuations represent attractive entry points. The firm's research note, authored by Keith Weiss, points to a roughly 33% decline in software multiples since October 2025, with current enterprise value-to-sales ratios at approximately 4.4X - levels last seen during peak uncertainty around public cloud adoption.

Weiss argues that fears about generative AI disruption have been overblown, noting that incumbent software vendors are better positioned to benefit from AI adoption than investors currently appreciate. The analyst specifically highlighted Microsoft, Intuit, Salesforce, ServiceNow, Palo Alto Networks, Shopify, Atlassian, Cloudflare, and Snowflake as the most compelling opportunities. Microsoft was described as a clear participant in major innovation cycles, while Intuit's valuation was labeled very attractive. Salesforce demonstrated strong AI momentum with AI-related annual recurring revenue growing 114% year-over-year.

Morgan Stanley estimates generative AI could add approximately $400 billion to the broader enterprise software total addressable market by 2028. The bank's thesis centers on the belief that software companies will ultimately monetize AI innovations, with the key question being which vendors will successfully capture value rather than whether software will participate in the AI cycle at all.