In a research note to investors, Morgan Stanley analyst Keith Weiss argued that “strong” positioning for ramping public cloud adoption, large distribution channels and installed customer base, and improving margins support a path to $50B in EBIT and a $1T market cap for Microsoft (MSFT). PATH TO TRILLION DOLLAR MARKET CAP: A Public Cloud solution spanning from core Infrastructure Services to compelling Platform-as-a-Service capabilities and up the stack to the application layer differentiates the Microsoft Public Cloud offering from cloud giants Amazon (AMZN) and Google (GOOG; GOOGL), Morgan Stanley’s Weiss told investors in a research note this morning. The analyst believes this combination of Public Cloud assets paired with Microsoft’s large existing customer base, developer base, expansive distribution channel, and strong on-premise technology will likely drive continuing share gains over the next three years. With Public Cloud adoption expected to grow from 21% of workloads to 44% in the next three years, Microsoft looks poised to maintain a dominant position in a public cloud market that he expects will more than double in size to $250B dollars. Weiss pointed out that, at the same time, the margin story at Microsoft has inflected, and he now forecasts improving gross and operating margins over the next three years. Given all of this, the analyst named Microsoft his top pick, increased his price target on the shares to $130 from $110, and noted that he sees the company having a path to $50B in EBIT and a $1T market cap. Weiss has an Overweight rating on Microsoft’s shares. TARGET UPPED: Earlier this month, Deutsche Bank analyst Karl Keirstead also raised his price target for Microsoft to $120 from $115 saying the tone around the “huge” Office and Server Product segments as well as the emerging Azure business is improving. The analyst reiterated a Buy rating on the shares and told investors that he sees signs of accelerating overall IT spending growth. PRICE ACTION: In morning trading, shares of Microsoft have gained almost 6% to $92.17.