Morgan Stanley Underweights Adobe and Workday in Software Reset

Analyst

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Summary · why it matters

Morgan Stanley reset its software coverage, assigning Underweight ratings to Adobe and Workday, Equal-Weight to Salesforce and Intuit, and naming eight stocks as its highest-conviction Overweights: Microsoft, Palo Alto Networks, CrowdStrike, Cloudflare, Datadog, ServiceNow, Snowflake, and Shopify. Analyst Adam Wood said the market has become too negative on the group, noting a software index has trailed the Nasdaq 100 by 40% and the S&P 500 by 30% over the past two years. The firm kept an Attractive industry view, arguing the sector has matured but offers more opportunity than investors currently credit. Wood described the sector as moving through a buy then build cycle, with infrastructure and cybersecurity benefiting from the current build phase while application software sits later in the cycle. Adobe shares dropped 4.95% in premarket trading and Workday fell 5.54%.