Goldman Sachs reiterates Microsoft's "Buy" rating: AI investment will drive long-term growth
Goldman Sachs analyst Kash Rangan reiterated a "Buy" rating on Microsoft and raised the target price by $70 to $550. He stated that Microsoft's progress in artificial intelligence (AI) investments will drive long-term growth, particularly in the developer tools ecosystem. Rangan emphasized that Microsoft's AI model context protocol and products like GitHub Copilot will facilitate the expansion of AI business, and noted that investments in the Azure AI Foundry platform and data centers will further enhance its market position
According to Zhitong Finance APP, Goldman Sachs analyst Kash Rangan reiterated a "Buy" rating on Microsoft (MSFT.US) and raised the target price for the stock by $70 to $550. The analyst stated that the four-day Microsoft Build 2025 developer conference enhanced his confidence in the company's artificial intelligence (AI) investments.
Kash Rangan said, "We believe these investments position Microsoft as a leader in the developer tools ecosystem (particularly excelling in early generative AI applications) and establish a robust and interoperable agent AI ecosystem. This will not only drive AI computing consumption on Azure but also promote the adoption of Microsoft platforms and applications—all of which will become richer and more vibrant through standardized, interconnected tools."
He further emphasized that Microsoft's model context protocol represents "a significant evolution" in its AI ecosystem. This protocol allows developers to integrate AI models with external systems. Additionally, Microsoft's GitHub Copilot and Copilot Studio were highlighted as two other key aspects of the company's rapid expansion in AI business. Other catalysts include the Azure AI Foundry platform for AI agents and Microsoft's ongoing investments in expanding Azure cloud regions and data centers.
Kash Rangan stated, "We still believe that as generative AI evolves from the infrastructure layer to the platform/application layer, Microsoft is in a very favorable position to capitalize on this transition. Just as we saw during the shift from on-premises to cloud, this transition could lead to a more capital-efficient, higher-margin recurring revenue model."
