--- title: "AMZN, GOOGL, and MSFT Stocks: Morgan Stanley Says $1.4T AI Bet Will Pay Off – Here's Why" type: "News" locale: "en" url: "https://longbridge.com/en/news/294108950.md" description: "Morgan Stanley believes Amazon, Alphabet, and Microsoft's $1.4 trillion AI investment will yield strong long-term profits, estimating returns on invested capital of 25-50%. Revenue drivers include GPU rentals with 60-70% operating margins and API access generating over 40% returns. While success depends on pricing and hardware efficiency, the bank views the spending as justified. Among the three, Microsoft is highlighted as the top buy, with a price target implying nearly 40.6% upside potential." datetime: "2026-07-28T20:18:32.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/294108950.md) - [en](https://longbridge.com/en/news/294108950.md) - [zh-HK](https://longbridge.com/zh-HK/news/294108950.md) --- # AMZN, GOOGL, and MSFT Stocks: Morgan Stanley Says $1.4T AI Bet Will Pay Off – Here's Why Investment bank Morgan Stanley (MS) believes that even though tech giants Amazon (AMZN), Alphabet (GOOGL), and Microsoft (MSFT) are spending heavily on AI, these investments could still lead to strong long-term profits. This comes despite investor worries about how much money is being spent. In total, the major cloud companies are expected to invest about $1.4 trillion in capital projects, with a large share of that going into AI chips and data centers. ### Claim 55% Off TipRanks 200% short exposure to AMZN with AMZO At first, this number may seem very high. However, four-star analyst Brian Nowak estimates that these investments could still produce returns on invested capital of around 25% to 50%. Because of this, Morgan Stanley believes that long-term earnings could more than make up for the heavy spending that is happening today. ## **How Returns Can Be Generated** To begin with, one way these returns could be generated is by renting out AI computing power to customers. To do this, cloud companies first buy very expensive Nvidia (NVDA) GPUs and then rent them out to businesses by the hour. As a result, the profit from this business depends mainly on how much companies can charge for rentals and how often the chips are being used. Interestingly, Morgan Stanley estimates that GPU rentals could produce operating margins of about 60% to 70%, along with returns on invested capital of between 25% and 40%. In addition to renting computing power, another major opportunity comes from selling access to AI models through application programming interfaces, or APIs. In simple terms, these services let developers and companies add AI features to their own products without having to build a full AI model themselves. Because of this, Morgan Stanley believes this type of business could generate returns above 40%. ## **Results Depend on Hardware Efficiency** However, these results still depend on how much companies are able to charge for using AI, and how efficiently their chips can handle each request. On the one hand, better AI models can support higher prices. On the other hand, faster and more efficient hardware can reduce the cost of delivering the service. Still, cloud companies may be able to earn strong returns in other ways, even when AI models are run on infrastructure they do not fully own. In this case, Morgan Stanley estimates that returns could be close to 25%. However, in this setup, the cost of renting computing power becomes much more important, which can reduce overall profit potential. Nevertheless, Morgan Stanley still believes that AI spending can pay off over time. ## **Which AI Stock Is the Better Buy?** Turning to Wall Street, out of the three stocks mentioned above, analysts think that MSFT stock has the most room to run. In fact, MSFT's price target of $552.29 per share implies almost 40.6% upside potential. ### Related Stocks - [AMZN.US](https://longbridge.com/en/quote/AMZN.US.md) - [MSFT.US](https://longbridge.com/en/quote/MSFT.US.md) - [GOOG.US](https://longbridge.com/en/quote/GOOG.US.md) - [GOOGL.US](https://longbridge.com/en/quote/GOOGL.US.md) - [MSFX.US](https://longbridge.com/en/quote/MSFX.US.md) - [GGLS.US](https://longbridge.com/en/quote/GGLS.US.md) - [AMZU.US](https://longbridge.com/en/quote/AMZU.US.md) - [AMZZ.US](https://longbridge.com/en/quote/AMZZ.US.md) - [MSFO.US](https://longbridge.com/en/quote/MSFO.US.md) - [GGLL.US](https://longbridge.com/en/quote/GGLL.US.md) - [GOOW.US](https://longbridge.com/en/quote/GOOW.US.md) - [MSFU.US](https://longbridge.com/en/quote/MSFU.US.md) - [AMZW.US](https://longbridge.com/en/quote/AMZW.US.md) - [AMZD.US](https://longbridge.com/en/quote/AMZD.US.md) - [MSFL.US](https://longbridge.com/en/quote/MSFL.US.md) - [AMZO.US](https://longbridge.com/en/quote/AMZO.US.md) - [AMZY.US](https://longbridge.com/en/quote/AMZY.US.md) - [AZYY.US](https://longbridge.com/en/quote/AZYY.US.md) - [AMZP.US](https://longbridge.com/en/quote/AMZP.US.md) - [MAGX.US](https://longbridge.com/en/quote/MAGX.US.md) - [MSFD.US](https://longbridge.com/en/quote/MSFD.US.md) - [MSFW.US](https://longbridge.com/en/quote/MSFW.US.md) - [MSFY.US](https://longbridge.com/en/quote/MSFY.US.md) - [GOOY.US](https://longbridge.com/en/quote/GOOY.US.md) - [GOU.US](https://longbridge.com/en/quote/GOU.US.md) - [GOOX.US](https://longbridge.com/en/quote/GOOX.US.md) - [GOOP.US](https://longbridge.com/en/quote/GOOP.US.md) - [MS.US](https://longbridge.com/en/quote/MS.US.md) - [NVDA.US](https://longbridge.com/en/quote/NVDA.US.md) - [MS-O.US](https://longbridge.com/en/quote/MS-O.US.md) - [MS-Q.US](https://longbridge.com/en/quote/MS-Q.US.md) - [MS-E.US](https://longbridge.com/en/quote/MS-E.US.md) - [MS-I.US](https://longbridge.com/en/quote/MS-I.US.md) - [MS-L.US](https://longbridge.com/en/quote/MS-L.US.md) - [MS-P.US](https://longbridge.com/en/quote/MS-P.US.md) - [MS-A.US](https://longbridge.com/en/quote/MS-A.US.md) - [MS-F.US](https://longbridge.com/en/quote/MS-F.US.md) - [MS-K.US](https://longbridge.com/en/quote/MS-K.US.md) - [NVD.DE](https://longbridge.com/en/quote/NVD.DE.md) ## Related News & Research - [Former Microsoft President Jeff Raikes Says AI Could Create a 'Talent Debt' by Replacing Entry-Level Work](https://longbridge.com/en/news/293906551.md) - [Google Is Developing a Chip for Its Own AI Models. 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