Goldman Sachs Lowers Microsoft Price Target to $450

Goldman Sachs analyst Kash Rangan lowered the price target on Microsoft (NASDAQ: MSFT) to $450 (from $500) while maintaining a Buy rating.

“We reiterate our Buy rating while lowering our PT to $450 ($500 prior) as we mark-to-market our multiples.

Following our March NDR and despite recent macro uncertainty, we expect Microsoft to execute well against our estimates for 11% revenue growth (in-line with Consensus), 31%/32% USD/CC Azure growth (Consensus 30%/31%) and EPS of $3.23 (Consensus $3.21).

That said, we see a wide range of outcomes for the three business units as customers navigate macro volatility and believe investors will closely watch: 1) Azure and AI contribution to Azure.

We see AI to continue gain traction as capacity comes online and Gen-AI use-cases move to the application layer, while the modest weakness in non-AI workloads is fixable over the coming quarters.

However, given our estimates for growth acceleration in FY26 non-AI NN revenue, we acknowledge some downside risk to our FY26 Azure estimates, 2) Guidance on FY26 CapEx growth.

Notwithstanding recent reports around lease adjustments/cancellations, we reiterate our expectations for FY26 CapEx growth +20% as Microsoft has shown the conviction to invest through air pockets in prior cycles.

Despite the implied 0-55% guidance range, we would not be surprised if Microsoft waits until F4Q25 to provide further clarity, and 3) Color on FY26 revenue and earnings.

We still believe FY26 earnings can reaccelerate (+17% vs. +10% in FY25), as Microsoft benefits from the higher margin AI inference phase and exits a period of extreme capital intensity.

We note that Microsoft and OpenAI’s revenue sharing agreement gives Microsoft strong visibility into FY26 AI revenue and underline that as Gen-AI moves from the Infrastructure layer to the Platform/Application layers, Microsoft is well-positioned to capitalize on this shift.”

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