Azure Will Reaccelerate Amid AI Ramp Up, Analyst Says: Microsoft 'One Of The Most Compelling Investment Opportunities'

A Goldman Sachs analyst says that Microsoft Corp (NASDAQ:MSFT) will soon reap the benefits of its investment into Azure and artificial intelligence.

The Microsoft Analyst: In a note published Thursday, Goldman Sachs analyst Kash Rangan reiterated his Buy rating for Microsoft, lowering its price target from $515 to $500.

Azure Confidence: Rangan believes Azure will outperform expectations.

“In-line with the trends of the last four quarters, we expect outperformance to be driven by further AI contribution to growth, broader share gains vs. hyperscaler competitors, and increased appetite to pay for high ROI services and
new projects as the market gains certainty on rates and the U.S. election as the year progresses,” the analyst said.

Rangan also cited an August Goldman Sachs survey where 74% of Global 2000 CIOs said they were going to allocate Gen-AI workloads primarily to Azure, above the 53% for Google and 42% for OpenAI, as a reason for optimism.

The analyst believes Azure can become a $200 billion business by 2029.

Investment Picks Up: Meanwhile, Rangan believes Microsoft will ramp up capital expenditures, particularly in the realm of artificial intelligence. He revised his 2026 and 2027 capital expenditure estimates up by $10 billion and $11 billion, respectively.

“We continue to see Microsoft's rapid CapEx buildout as a necessary investment ahead of the structural shift to Gen-AI, which is likely to present a vast revenue opportunity across all layers of the AI technology stack,” Rangan said.

The analyst noted that the ramp-up of Generative AI coincides with Microsoft reaching critical scale (represented by CapEx/revenue below 300%) much faster with Generative AI than it did with Azure a decade ago.

All of these trends led Rangan to label Microsoft as “one of the most compelling investment opportunities in the technology industry and across sectors.”

“With a strong presence across all layers of the cloud stack, including applications, platforms, and infrastructure, Microsoft is well positioned, in our view, to capitalize on a number of long-term secular trends, such as Gen-AI, public cloud consumption, SaaS adoption, digital transformation, AI/ML, BI/analytics, and DevOps (amongst others),” the analyst said.

MSFT Price Action: Microsoft’s shares traded down 0.31% to $416.18 Thursday at publication.

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