Microsoft: Goldman Sachs Raises PT to $550, Maintains Buy Rating

Microsoft: Goldman Sachs Raises PT to $550, Maintains Buy Rating

Goldman Sachs analyst Kash Rangan has increased the price target for Microsoft Corporation (NASDAQ: MSFT) to $550, up from the previous $480, while maintaining a Buy rating on the stock. The new target reflects the analyst's confidence in Microsoft's recent advancements in artificial intelligence (AI) and the company's strong financial performance [1].

Microsoft is currently trading at $458.87 with a market capitalization of $3.41 trillion. The stock has seen 25 analysts recently revise their earnings estimates upward, indicating strong analyst support. Rangan's updated valuation multiples and endorsement of Microsoft's AI initiatives are key drivers behind the price target increase [1].

Microsoft's AI investments, showcased at the recent Microsoft Build conference, are expected to contribute significantly to a forecasted $300 billion-plus in Microsoft Cloud revenue by the fiscal year 2029. The company's revenue growth rate is at 14.13%, and its financial health score is rated at 3.07 by InvestingPro [1].

Rangan highlighted several key developments from Microsoft that are poised to drive growth. These include the integration of the Model Context Protocol (MCP) to set common development standards for agentic AI, the strong momentum of GitHub Copilot with over 15 million developers, and the introduction of Copilot agent. Additionally, the expanded capabilities of Copilot Studio and the emergence of Foundry as a foundation for open agentic web development, along with the ongoing scaling of Azure, were noted as factors reinforcing Microsoft's leadership position [1].

As generative AI (GenAI) shifts from infrastructure to platform and application layers, Microsoft stands to benefit from a transition to a more capital-efficient, high-margin recurring revenue model. The stock is currently trading at a P/E ratio of 35.21 and near its 52-week high of $468.35, with InvestingPro suggesting that it is trading above its Fair Value [1].

In other developments, Proofpoint (NASDAQ: PFPT) has announced its plan to acquire Hornetsecurity Group for $1 billion, aiming to enhance its security offerings for small and mid-sized businesses. Meanwhile, Citi analysts have raised Microsoft's stock price target to $540, maintaining a Buy rating. The European Union is also likely to accept Microsoft's proposal to adjust the pricing of its Office product, resolving a long-standing antitrust issue [1].

References:
[1] https://www.investing.com/news/analyst-ratings/goldman-sachs-raises-microsoft-stock-price-target-to-550-93CH-4054324