Goldman Sachs Backs Microsoft with $640 Price Target

Goldman Sachs has added Microsoft to its closely watched 'Conviction List', while removing Broadcom, Johnson & Johnson, and ServiceNow. The financial giant's analysts believe that Microsoft is well-positioned to benefit from the shift towards enterprise deployment of AI technology.

The software giant's recent fiscal Q4 results exceeded expectations, with revenue hitting $90.01 billion, up 17.8% year-over-year, and non-GAAP EPS beating estimates by 11.81%. Azure growth reached 43%, crossing $100 billion in annual revenue for the first time.

Goldman's analysts argue that Microsoft has an 'ideal position' as AI moves from training to enterprise deployment, citing the company's strong fundamentals, analyst positioning, and its enterprise AI scenario. The firm's price target for Microsoft is $640, which sits well above the current share price of $487.65.

While the stock has had a significant run-up in recent weeks, Goldman's analysts believe that there is still room for upside. However, they also caution that any deceleration in Azure growth or Copilot adoption would leave the multiple with less room for error.