Morgan Stanley says Microsoft's AI revenue expectations may be lagging behind infrastructure deployment and monetization potential

On May 27, Morgan Stanley analyst Keith Weiss noted that GenAI demand at Microsoft Corporation is ahead of supply, driving rapid capital expenditure forecasts, but revenue expectations have not increased at the same pace.

Morgan Stanley's analysis of 'Monetization per Megawatt and Capex-Implied Azure forecasts' suggests revenue estimates may be inappropriately lagging, indicating room for upward revisions and significant upside potential.

According to the bank's analysis of hyperscaler spending and Microsoft's data center growth, the company is deploying AI datacenter capacity well ahead of near-term monetization, and the market may not have fully recognized the potential scale of future revenue.