Analysts at Goldman Sachs, recently indicated that Microsoft’s (NASDAQ:MSFT) Azure AI Services could emerge as a leading force in generative AI in the near term, with a potential to generate $200 billion in revenue over the next five years.
Holding a Buy rating and a price target of $450 for Microsoft’s stock, the analysts highlighted Microsoft’s strong position in the market for Gen-AI services. They noted consistent feedback from CEO discussions during the GS Software Bus Tour, which pointed to stable enterprise spending and positioned Microsoft as a frontrunner in this space.
The analysts expect Microsoft to perform well against their Q2/24 forecasts, which include a 17% increase in revenue, 28% and 27% growth in Azure, and an EPS of $2.85. They also suggested that AI services could contribute significantly to Azure’s growth in FY24, maintaining its role as Microsoft’s primary channel for AI monetization over the next year.
Goldman Sachs anticipates Microsoft 365 Copilot gaining significant traction in 2025 and remains optimistic about the long-term potential of Copilot within Microsoft’s 380 million-strong enterprise Office365 user base.