Hua Er Jie Jian Wen·2026-01-19 13:51Core Viewpoint - The recent market pullback may present an excellent "buying opportunity," with Goldman Sachs analysts asserting that Microsoft is the best investment choice to leverage the AI product cycle for compounded growth [2] Group 1: Financial Projections - Goldman Sachs predicts Microsoft's earnings per share (EPS) will steadily reach $35 by fiscal year 2030, indicating a compound annual growth rate (CAGR) of over 20% [2] - The current market panic may serve as an entry point for investors, as Microsoft is establishing its dominance in the AI era through flexible infrastructure and unique profit margin advantages [2] Group 2: AI Cycle and Profitability - Microsoft’s management highlighted that the current AI cycle mirrors the early cloud cycle, where high initial costs were followed by significant profit margin expansion due to scale effects and efficiency improvements [3] - The company believes its leadership in the AI cycle is even stronger than during the cloud cycle, driven by operational discipline and rapid efficiency gains [3] Group 3: Competitive Advantages - Microsoft's partnership with OpenAI provides a unique gross margin advantage, as it does not incur additional API costs for using OpenAI models, creating a significant competitive edge over other software providers [4] - Microsoft is redefining the role of large language models (LLMs) as the next generation of abstraction layers, which will shift applications from hard-coded rules to intent-driven execution [4] Group 4: Infrastructure Strategy - Microsoft has demonstrated strong strategic resolve by rejecting the "bring your own chip" (BYOC) model, which could isolate infrastructure stacks and undermine core profit drivers [6] - The company’s profit advantage stems from optimizing the entire stack of data centers, power, cooling, networking, and silicon, rather than focusing on individual components [6] Group 5: Market Demand Trends - There is a noticeable shift in enterprise customer discussions regarding AI adoption, moving from "whether to adopt" to "when and to what extent to expand" [7] - Microsoft has observed widespread adoption of enterprise AI, with customers typically starting with pilot programs and rapidly scaling up as familiarity increases [7] - The company has adjusted its sales incentives to focus on accelerating customer value realization rather than merely pricing, indicating a shift towards deeper ecosystem engagement [7]