Goldman Sachs expects Microsoft's internal research and development computing resource ratio to rise to 20%, maintaining a "Buy" rating

Goldman Sachs published a research report indicating that since Microsoft (MSFT.US) announced its second fiscal quarter results for the period ending December last year at the end of last month, its stock price has cumulatively fallen by about 15%. This is believed to be due to the upward revision of capital expenditure guidance, but management did not simultaneously raise the growth forecast for Azure, raising market concerns and worries about capital return rates and Azure's competition with peers, as well as market attention on whether the Office 365 business will be impacted by new AI competition.

The firm pointed out that the growth of Microsoft Azure fundamentally depends on the new AI computing power capacity and the ratio of resources allocated by Microsoft for internal use versus external customers. Considering that Microsoft is currently facing limited computing power supply, the new computing power is expected to be allocated to Copilot and internal R&D, resulting in an increased proportion of computing resources used for internal purposes.

However, Goldman Sachs still believes that capital expenditure for internal R&D is a long-term investment, with some currently not directly monetized but still potentially monetizable in the future, which remains crucial to Microsoft's overall development strategy. The firm has revised its forecast for the proportion of computing resources used for internal purposes from about 10% to about 20%, believing this will drive Microsoft's multi-dimensional strategic AI positioning in the future and bring better returns in the medium term, maintaining a "Buy" rating with a target price of $600