Goldman expects a rebound for Mag 7 underperformer Microsoft

varam2 hours ago02 mins mins

Microsoft could gain ground as artificial intelligence seems poised to boost, rather than batter, shares of the “Magnificent Seven” stock, according to Goldman Sachs. The investment bank has a buy rating on Microsoft, with a $600 price target on shares, implying nearly 61% upside from Thursday’s close. “We believe the pace of deceleration in [Microsoft 365] has already slowed, Copilot datapoints are improving, and … adoption [of the company’s AI-enabled, high-end enterprise license tier] will begin to move the needle in the next 9 months,” Goldman Sachs analyst Gabriela Borges said Monday in a note to clients. MSFT YTD mountain Microsoft shares year to date Microsoft slumped 23% in the three-month period ended March 31, marking its worst financial quarter since 2008. The stock is also the biggest laggard in the Mag 7 in 2026, and it’s vastly underperformed the S & P 500’s 3.5% year-to-date decline. Its slump comes as investors continue to wring their hands over the possibility that AI tools like Claude Cowork might overtake Microsoft 365, which has been a major revenue driver for Microsoft. Recently, it aimed to bolster its revenue base from productivity software by promoting its Microsoft 365 Copilot AI to clients. However, just 3% of commercial Office customers had obtained licenses for the AI add-on as of the end of March. Nevertheless, Goldman Sachs expects AI tools to increasingly form an integral part of the Microsoft product suite over the next nine months or so. “We … continue to view Microsoft as best positioned in our coverage to compound AI driven product cycles, from AI compute leadership to Copilot and agent orchestration at the platform and application layers,” Borges wrote. The analyst also noted that AI disintermediation risks are “already more than priced in,” despite “the perception that Copilot functionality lags other AI tools.” Goldman Sachs’ call falls in line with consensus on the Street. Of the 60 analysts covering Microsoft, 55 have a buy or strong buy on the stock, according to LSEG.