Morgan Stanley analysts have recently upgraded Confluent (NASDAQ:CFLT) and MongoDB (NASDAQ:MDB) from Equal Weight to Overweight after conducting an AlphaWise survey. The survey revealed that a majority of optimizations were already underway, and cloud growth expectations were expected to reaccelerate in 2024.

According to the survey, 73% of respondents are actively engaged in cloud optimization initiatives, with 44% having already started in 2022 and 29% planning to begin in 2023. The analysts noted that while the market understands the headwinds from cloud digestion activity on growth over the next few quarters, companies currently optimizing or planning to optimize expect to see acceleration in 2024, with a higher percentage of their applications residing in the public cloud post-optimization than what they had planned for pre-optimization.

As a result of the positive survey results, Morgan Stanley raised the rating on MDB with the price target also increased to $270 per share. The analysts noted that MDB has market leadership in the operational database market, multiple share gain opportunities, and a pivot to profitability.

Similarly, the price target on CLFT stock has gone up to $30 per share. The analysts see an attractive valuation, coupled with a major pivot to profitability and a large growth opportunity that remains intact.

Investors have responded positively to the news, with MDB and CFLT shares up 3% and 3.3%, respectively, in premarket trading on Wednesday. As such, this upgrade by Morgan Stanley analysts could bring renewed attention to these stocks and potentially attract more investors looking to capitalize on the expected cloud growth acceleration in the coming years.