Goldman Sachs revamps Microsoft stock price target before earnings

Core Viewpoint - Goldman Sachs has issued a buy rating for Microsoft (MSFT) with a price target of $655, indicating a potential upside of nearly 37% from current prices [1] Group 1: Stock Performance - Microsoft has achieved a remarkable 91% gain over the past three years, outperforming the broader market [2] - In the previous year, the stock's performance was muted, with only a 7% increase, attributed to AI fatigue despite its first-mover advantage [2] - Currently, the stock is trading at over 28-times non-GAAP forward earnings, which is 12% lower than its five-year average [2] Group 2: Analyst Perspectives - Goldman Sachs holds the most bullish price target among major analysts, with others like Morgan Stanley at $650, Barclays at $610, J.P. Morgan at $575, and Wedbush at $625 [3][7] Group 3: AI Strategy and Long-term Value - Goldman Sachs believes the market is underestimating the long-term value of Microsoft's AI initiatives, particularly its Copilot tools and AI agent-based workflows [4][5] - The firm argues that Microsoft's approach is transitioning from experimentation to practical, repeatable use cases [6] - Microsoft's Copilot apps have gained significant traction, boasting 100 million monthly active users and being utilized by over 90% of Fortune 500 companies [8][9] Group 4: Financial Projections - Goldman Sachs projects that Microsoft could achieve over $35 in earnings per share by fiscal 2030, indicating more than 20% EPS growth, surpassing the mid-teens growth expected from other mega-cap companies [10] Group 5: Market Dynamics - The market for agent-based AI is expected to grow significantly, with Gartner predicting that 40% of enterprise applications will include task-specific AI agents by the end of 2026 [13] - Microsoft's Azure business has surpassed $75 billion in sales in fiscal 2025, with continued growth anticipated [18]