Microsoft Shares Poised for Significant Growth, Goldman Sachs Sets $655 Target

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Goldman Sachs has initiated coverage of Microsoft with a bullish "buy" rating, setting a price target of $655 per share. This projection implies a potential upside of approximately 37% from current levels. The optimistic outlook from the investment bank coincides with notable political developments concerning the tech giant's operations.

The view from Goldman Sachs aligns with a broader Wall Street consensus. Roughly 97% of the 64 analysts monitoring the company recommend it as a "buy" or "overweight." The average price target among experts stands at about $630. In a separate move on Monday, Barclays maintained its "overweight" stance on Microsoft, though it modestly adjusted its target from $625 to $610.

Generative AI Identified as Key Growth Driver

According to Goldman Sachs analyst Gabriela Borges, the market is underestimating Microsoft's growth trajectory in the era of generative artificial intelligence. The firm has issued ambitious forecasts, predicting that Azure AI revenue will grow at an annual rate of 66% through the 2030 fiscal year. Furthermore, Goldman anticipates a substantial expansion in margins—from around 17% in FY2025 to nearly 60% in the long term, once the company's AI infrastructure matures.

Such dramatic improvements are expected to require significant capital investment. For the 2026 fiscal year, the bank models capital expenditures of $148 billion, nearly four times the level spent in 2022. This strategy is predicated on the successful monetization of cloud infrastructure at the projected scale.

Political Support on Energy Costs Emerges

A separate development provides potential regulatory and cost relief. Former President Donald Trump announced that Microsoft has committed to ensuring consumers will not bear the burden of higher electricity bills resulting from the operation of its AI data centers. This pledge comes as U.S. power prices rose 6% in August of last year, a hike partly attributed to energy-intensive AI computing facilities.

By collaborating with the government to "control rising power bills," Microsoft is positioning itself as a leader in sustainable AI infrastructure while simultaneously mitigating a key regulatory risk. The significance of Microsoft's partnerships in the sector was highlighted elsewhere: shares of AI cloud services provider Iren surged more than 9% on Monday after Bernstein named it a top pick, citing a nearly $10 billion contract with Microsoft.

The Path Forward: Execution on Investment

The critical question for investors now is whether the massive planned capital outlays will translate into accelerated revenue growth as anticipated. The company's upcoming quarterly earnings report is likely to offer initial insights into this dynamic.