Morgan Stanley is one of the most recognized investment banks in the world. The company has been around for over 100 years. It has a long history of investing in companies that become market leaders. The company is known for its stock picks, and this article will outline some of the stocks that Morgan Stanley has recommended in recent months.
Since the start of the year, the global markets have been experiencing a mini-rally triggered by positive U.S. economic data. Inflation is cooling down. And the Federal Reserve is taking notice.
The central bank has announced a quarter-point rate increase, the smallest adjustment since March, signaling an easing monetary policy in the country. Last week marked the eighth straight rate hike coming from the Fed.
However, no investor can afford to be complacent. Last year was a disaster for the broader markets. A consumer spending slowdown may quickly become the new norm, with Wall Street starting to feel the shortfall in profits. Talk of inflation and layoffs has investors worried because they could take a large hit.
Morgan Stanley’s investment chief warns clients that earnings reports to come will likely disappoint investors and cause the major stock indexes to drop. Even though it is unlikely a recession will happen, even if it does, the economy is not in as good of shape as people think.
Under these circumstances, it will not hurt to consider Morgan Stanley stock picks.
Advanced Micro Devices (AMD)
While semiconductor stocks are facing some difficult times, AMD (NASDAQ:AMD) is excelling. The stock has been up almost 35% since the start of the year.
AMD released earnings with excellent sales but only a bare minimum of profits due to amortization costs associated with the Xilinx acquisition and a significant decrease in PC sales.
It posted a 16% year-over-year revenue increase to $5.6 billion from $4.83 billion. However, the net income was $21 million, a steep drop from $974 million in the prior-year quarter. The gross margin was down by 740 basis points to 43%, while the operating costs also increased during this quarter.
AMD expects its sales to decline during the first quarter of the 2023 fiscal year due to slow demand. The company expects gains in the data center and embedded segment, while sales will be slower in the gaming and client segments.
Furthermore, AMD has been riding high on the recent data center boom for quite a long time. Though it is not guaranteed to stay as significant when Intel (NASDAQ:INTC) and NVIDIA (NASDAQ:NVDA), who still lead the industry, come back to life, AMD is one to watch seriously in the future.
Intel has been left in the dust with AMD’s Genoa Server CPUs. Intel is still the market leader. But it won’t hold on to the crown for too much longer. During the fourth quarter of 2022, AMD reported a more than 42% increase in data center sales compared to the prior year. Overall, the performance improved significantly from previous quarters.
For 2022, revenues were up by almost 64%, which means that the company is doing exceptionally well in the data center section.
Delta Airlines (DAL)
Among stock picks, Delta (NYSE:DAL) has been a favorite of Morgan Stanley, and with good reason. It posted a bright earnings report for the fourth quarter recently.
It is looking to aggressively cut down on costs to continue improving its financial performance even further.
The airline made $13.44 billion in total revenue in the final quarter of 2022, a 17% increase from $11.44 billion in the same quarter in 2019.
There was a sharp uptick in corporate bookings in the ten days before earnings. And demand for flights to Europe was stronger than ever. This will result in solid results in the coming quarter. In addition, at the end of 2022, Delta had an operating cash flow of $6.2 billion and $9.4 billion in liquidity.
Delta had a very successful year in terms of both new members and new cardholders. It gained 8.5 million SkyMiles members and 1.2 million Delta American Express cardholders.
Delta is expecting a revenue boost of 14% to 17% and forecasts an increase in EPS of between 4% and 6% in the first quarter of 2023 versus 2019.
In addition, Delta is taking meaningful steps towards reducing costs and has already introduced hundreds of fuel-efficient planes to its fleet. Researchers predict that these jet planes will be 20% more effective than the current fleet.
In a connected move, Delta is completing its goal of net zero emissions by 2050. The company’s Delta Sustainable Skies Lab was introduced at the 2023 Consumer Electronics Show. The lab focuses on sustainable air travel and provides a complete overview of current and future technologies dedicated to this cause.
For all these reasons, it is no surprise that Morgan Stanley has named Delta one of its favorites when discussing stock picks.
Microsoft (NASDAQ:MSFT) is an excellent investment that can be used to provide the company with a competitive edge. It has been able to grow steadily since its inception in 1975. And it continues to grow with each passing day.
Microsoft’s long history of innovation and success makes it an excellent investment for any company. Microsoft’s services are used by millions of people across the globe, making it a great way for companies to grow their business.
Microsoft stock is usually a good long-term pick as it allows new investors to profit greatly over time. However, its investment in OpenAI, the company behind ChatGPT, has been grabbing headlines recently.
Microsoft is not immune to change. The interest in ChatGPT is red-hot at the moment. Microsoft, a notable investor, and partner of OpenAI, have provided three rounds of investment into the company. The investment has the potential to turn into something substantial in the future.
For Morgan Stanley, the reasons to invest in Microsoft are varied. The tech giant is experiencing significant growth in key public cloud and data management areas. The stock also performed well during security issues recently. In addition, the investment bank believes demand for Microsoft’s products is highly stable. Hence, investor fears regarding churn rates are overblown.
MSFT shares are down over 14% in the last year, giving investors an attractive entry point to load up on this name.
On the publication date, Faizan Farooque did not hold (directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Airline, Cloud, Software, Technology, Consumer Discretionary, Travel