Goldman Sachs Puts Faith in Microsoft's AI-Fueled Growth

Goldman Sachs has added Microsoft to its U.S. Conviction List, raising its price target to $640 and implying roughly 38% upside from current levels.

Azure surpassed $100 billion in annual revenue growing at 43%, making it the engine behind Microsoft's shift to recurring AI-powered subscription revenue.

Gabriela Borges, a Goldman software analyst, believes Microsoft is among the best positioned to benefit because it already has AI woven into the software businesses millions of workers use every day.

Microsoft's latest quarterly results show revenue climbed 18% year over year to approximately $90 billion while Azure revenue growth accelerated to about 43%. The company also disclosed Azure now generates more than $100 billion in annual revenue, with Copilot adoption surpassing 30 million paid seats.

Goldman expects Microsoft's earnings-per-share growth to accelerate from roughly 12% in fiscal 2027 to more than 20% by fiscal 2029 as Copilot adoption expands, AI operating efficiencies improve, and enterprise deployments become routine.