Goldman Sachs hikes Microsoft price target, sees AI investments driving strong growth

CNBC

20-05-2025

Goldman Sachs is more confident in Microsoft after the company's announcements at its annual Build developer conference. Analyst Kash Rangan reiterated his buy rating on Microsoft and lifted his price target by $70 to $550, which suggests the stock could gain roughly 19.8% from Monday's close. Rangan said the four-day event, which began Monday, left him with increasing conviction in the company's artificial intelligent investments. "We believe these investments help position Microsoft at the forefront of developer tool ecosystem (seeing some of the most promising early GenAI adoption) and help establish a robust and interoperable ecosystem for agentic AI," Rangan wrote in a Monday note to clients. "This will not only support consumption of AI compute on Azure, but adoption of Microsoft's platforms and applications, all of which become richer and more dynamic with standardized, interconnected tools," he added. MSFT 1Y mountain Microsoft stock performance. Rangan highlighted Microsoft's Model Context Protocol, which enables developers to integrate AI models and external systems, as a "major evolution" in Microsoft's AI ecosystem. Microsoft's GitHub Copilot and Copilot Studio are two other impressive parts of the company's rapidly scaling AI business to Rangan, who pointed out that both technologies have seen user growth. Microsoft announced a GitHub Copilot coding agent — which acts as a fully asynchronous coding agent that can write, run and test code — that the analyst believes could attract more productivity-hungry customers. Other growth catalysts for Microsoft are its Azure AI Foundry platform for AI agents, which has similarly seen booming customer growth, as well as the company's focus on scaling its Azure cloud regions and data centers. "We continue to believe that as Gen-AI moves from the Infrastructure layer to the Platform/Application layers, Microsoft is well positioned to capitalize on this shift, wherein a more capital efficient and higher margin recurring revenue model could become a reality, just as it did during the on-prem to cloud transition," Rangan said. Microsoft remains a favorite on Wall Street. Fifty-six of 63 analysts covering the stock have a strong buy or buy rating, per LSEG. Shares are up roughly 8.9% year to date.