Microsoft's $4 Trillion Moment Is Now In Sight: Goldman Sachs

Microsoft Corp. MSFT is getting closer to a $4 trillion market cap, with Goldman Sachs lifting its 12-month price target from $480 to $550. The firm cited a growing conviction in the tech giant’s AI-first strategy and expanding enterprise cloud dominance.

The stock, currently trading near $459, would need to rally nearly 20% to hit that level — a move Goldman believes is increasingly likely following announcements from Microsoft Build 2025.

In a note shared Tuesday, Kash Rangan, equity analyst at Goldman, said Microsoft is “positioned at the forefront of developer tool innovation” thanks to a wave of AI announcements that strengthen its competitive edge across infrastructure, platforms, and applications.

Big Bets on Open AI Tools and Developer Adoption

At Build 2025 – Microsoft’s annual conference – the tech giant rolled out updates across its AI platforms, including GitHub Copilot, which now has more than 15 million users — four times more than a year ago.

A new Copilot coding agent can now write, run, and test code with little help from developers, which could lead to wider adoption and stronger monetization.

Copilot Studio, Microsoft's low-code platform for building AI agents, has already been used by over 230,000 organizations, including 90% of Fortune 500 companies.

More than 1 million agents have been created, and new features like Copilot Tuning and multi-agent orchestration allow companies to build smarter, more customized tools using their own data.

Open Protocols Could Be A Game-Changer

Goldman sees Microsoft's commitment to Model Context Protocol (MCP) — likened to HTTP for the AI agent world — as a foundational shift.

“MCP represents Microsoft’s commitment to the open, standardized development of AI agents; we see this common protocol helping catalyze adoption of Microsoft’s broader platform and applications,” Rangan said.

The MCP lets different apps and agents work together easily. Microsoft backing this open approach could help its AI tools become more widely adopted.

The investment bank compared it to the early internet, where open standards allowed developers to build freely and create massive value.

One example is NLWeb, an open-source tool based on MCP that turns websites into natural language-driven AI applications.

This, according to Goldman, lowers the barrier to AI adoption and further entrenches Microsoft's platform in the enterprise and developer ecosystems.

Azure Foundry And Infrastructure Expansion

Microsoft is also expanding its Azure AI Foundry, a platform that helps companies build and run AI tools at scale. Less than a year since launch, it has over 70,000 users and processed more than 100 trillion tokens last quarter — a fivefold increase year over year.

The company is doubling down on cloud infrastructure, with more than 70 global regions and 10 new data centers added in just the last three months.

New investments include liquid cooling systems, more fiber-optic networks, and in-house hardware like Azure Cobalt CPUs.

A Familiar Playbook For AI Monetization

Goldman believes Microsoft is using the same strategy that worked with Office 365 — creating tiered pricing for its AI tools that will lead to steady growth and stronger margins. As products like Microsoft 365 Copilot and Dynamics AI become more powerful, businesses may be more willing to pay for them.

With tech becoming a bigger piece of the global economy, and Microsoft investing heavily across cloud, AI, and productivity software, Goldman sees plenty of room for upside.

Goldman estimates Microsoft Cloud — which includes Azure, Office 365 Commercial, Dynamics 365, and LinkedIn Commercial — will generate more than $300 billion in revenue by fiscal year 2029, up from under $140 billion today.

This forecast assumes a compound annual growth rate of roughly 22% from fiscal-year 2024 levels, supported by rising penetration of its E5 suite, increased AI monetization, and broader enterprise demand.

A 20% rally from current levels would make Microsoft the first publicly traded company to surpass the $4 trillion valuation milestone.

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