TLDR
- Goldman Sachs raised Microsoft’s price target to $550 from $480, reiterating a Buy rating
- Microsoft’s AI investments are expected to contribute to $300 billion-plus in Cloud revenue by fiscal 2029
- Azure revenue grew 33% according to recent earnings, showing strong cloud performance
- Microsoft’s FY 2025 Q3 showed 13% revenue growth to $70.1 billion and 16% increase in operating income
- Top investor Julian Lin sees potential for 13-15% forward returns for years to come
Microsoft has seen its stock price climb in recent weeks after a strong earnings report and growing analyst confidence in its AI initiatives. On Tuesday, Goldman Sachs analyst Kash Rangan increased Microsoft’s price target to $550, up from $480, while maintaining a Buy rating on the stock.
Microsoft is currently trading at $458.87 with a market cap of $3.41 trillion. The company has attracted strong support from Wall Street analysts.
25 analysts have recently revised their earnings estimates upward for Microsoft. This shows growing confidence in the tech giant’s future performance.
Goldman’s revision reflects updated valuation multiples and a strong endorsement of Microsoft’s advancements in artificial intelligence. Rangan’s confidence increased following the Microsoft Build conference.
The company’s AI initiatives are projected to drive substantial growth. They could contribute to more than $300 billion in Microsoft Cloud revenue by fiscal year 2029.
AI Innovation Fueling Growth
Microsoft showcased several AI enhancements at its recent Build conference. These span across its entire product stack.
The company expanded developer access and deepened platform integration. It also demonstrated commitment to open agentic AI through the Model Context Protocol (MCP).
These advancements are strengthening Microsoft’s position in the developer tool ecosystem. This comes as generative AI begins to see wider adoption.
Rangan highlighted several key developments from Microsoft. The integration of MCP sets common development standards for agentic AI.
GitHub Copilot has gained strong momentum with more than 15 million developers. The introduction of Copilot agent represents a major step forward in AI capabilities.
Microsoft also expanded Copilot Studio for fine-tuning and orchestrating multiple AI agents. Foundry has emerged as a foundation for open agentic web development.
The ongoing scaling of Azure, now spanning over 70 regions, reinforces Microsoft’s leadership position in cloud computing. Azure’s revenue grew by an impressive 33% according to recent earnings.
Market Performance and Investor Confidence
Microsoft’s recent financial performance has been robust. The company reported $70.1 billion in revenue for FY 2025 Q3, a 13% increase year-over-year.
Operating income reached $32.0 billion, representing a 16% growth compared to the same period last year. This strong performance has helped boost investor confidence.
The stock has risen approximately 16% since the earnings report. Microsoft is now up almost 10% year-to-date.
Top investor Julian Lin views Microsoft as a stock to keep during both good and bad market conditions. He states, “In a world of uncertainty, investors may be looking for reliability.”
Lin believes that Microsoft’s scale, profitability, and reliability justify its premium valuation compared to peers. He sees “a clear path for 13% to 15% forward returns for many years to come.”
Wall Street remains bullish on Microsoft. The stock has 30 Buy and 5 Hold ratings, giving it a Strong Buy consensus. The 12-month average price target of $509.41 suggests room for further growth.
In other recent news, the European Union is likely to accept Microsoft’s proposal to adjust Office pricing, resolving a long-standing antitrust issue. This removes a potential regulatory hurdle for the company.
Microsoft’s share price has been trading near its 52-week high of $468.35, with a P/E ratio of 35.21.
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