Goldman Sachs: Microsoft is demonstrating the path to monetizing AI investments for Wall Street, with stock prices soaring to nearly an 18-year high

According to the Zhitong Finance APP, Gabriela Borges, an analyst at Goldman Sachs, stated that Microsoft (MSFT.US) is sending clearer signals to investors—its investments in artificial intelligence now have diversified monetization pathways. Boosted by this, Microsoft's stock price recorded its largest single-day increase in nearly 18 years on Thursday.

In an interview on Thursday, Borges said, "Microsoft's ability to leverage different monetization strategies is revealing more and more clues, which were far less obvious before."

Microsoft's financial report released on Wednesday showed that its cloud business growth rate reached the fastest since 2022, indicating that its AI and computing services are gaining customer recognition, while capital expenditure growth is showing signs of slowing down. This drove a significant rise in Microsoft's stock price. Borges maintained a "buy" rating on Microsoft and raised the 12-month target price by nearly 5% to $640, implying about a 64% upside from Wednesday's closing price.

She pointed out, "One of the main arguments for the market's bearish view on Microsoft over the past 6 to 12 months has been that the Copilot product has not yet reached an ideal state." However, she added that the product quality is continuously improving, and the increase in user numbers helps create a "positive feedback loop."

On the New York market on Thursday, Microsoft's stock price rose by as much as 17.5% to $458, nearing its largest single-day increase since October 2008.

Borges positioned Microsoft as a "value discovery" target—currently, Google's parent company Alphabet dominates the enterprise AI application field, with nearly 90% of the Fortune 100 companies adopting Google's Gemini enterprise version. However, Microsoft disclosed on Wednesday that its 365 Copilot paid seats have surpassed 30 million, a significant increase from about 20 million three months ago, indicating that the adoption rate of its flagship AI assistant in enterprises is continuously rising.

Borges stated that Microsoft had been "put on the back burner by the market for several quarters," with investors generally believing that Google was in the lead. However, she believes that the next 12 months will prove that the gap between the two is "not as bad as people imagine," and that Microsoft has made "considerable improvements behind the scenes."

Borges noted that the large-scale adoption of Copilot is still in the early exploratory stage, comparing the current phase to "broad trial and error to find a good product-market fit," but she is confident about the maturity of application scenarios.

"I have no doubt that in 6 months, 1 year later—even looking back at Goldman Sachs' own application experience over the past 12 months—we have made significant progress in enhancing our daily work with these tools," Borges said