Goldman Sachs boosts Microsoft price target amid AI investment optimism

On May 20, 2025, Goldman Sachs expressed increased confidence in Microsoft following significant announcements made at the annual Build developer conference. Analyst Kash Rangan highlighted various aspects of Microsoft’s commitment to artificial intelligence, reiterating a buy rating and raising the stock’s price target by $70 to a total of $550. This adjustment indicates a belief that Microsoft's stock may increase approximately 19.8% from its value at the close of the previous trading session. Rangan noted that the conference bolstered his conviction regarding Microsoft’s AI investments, which he believes position the company at the forefront of the developer ecosystem. The four-day conference unveiled transformative strategies that showcase Microsoft's focus on AI developments, particularly its Model Context Protocol. This innovation simplifies integration for developers working with AI models and external systems, seen as a significant leap towards advancing Microsoft's ecosystem. Additionally, Rangan praised tools such as GitHub Copilot and Copilot Studio, noting their rising popularity and potential in enhancing productivity for developers. By acting as a fully functional coding agent, GitHub Copilot can write, run, and test code, making it an attractive option for businesses looking to improve efficiency. Further contributing to Microsoft's growth narrative are successful AI platforms, especially the Azure AI Foundry, which has experienced notable customer growth. The analyst mentioned the company's ongoing efforts to scale Azure cloud regions and enhance data center capabilities, which are critical as the landscape of Gen-AI transitions from infrastructure to applications. Rangan envisions a more resource-efficient, higher-margin recurring revenue model becoming attainable, similar to what occurred during the shift from on-premises structures to cloud solutions in prior years. In the broader scope of Wall Street's view on Microsoft, the tech giant remains a favorite among analysts. Out of 63 analysts covering Microsoft shares, 56 maintain strong buy or buy ratings, reinforcing positive sentiment regarding the company's future trajectory. Year-to-date, Microsoft's stock has risen approximately 8.9%, reflecting the optimism surrounding its strategic initiatives and market performance. This confidence from both analysts and the market positions Microsoft uniquely within an evolving tech landscape, particularly in the growing field of AI, where the company aims to establish itself as a leader.