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Investing.com — Not all legacy tech is disappointing today. While IBM (NYSE:IBM) and Intel (NASDAQ:INTC) are trading lower, Microsoft (NASDAQ:MSFT) is up 2% on a Goldman Sachs (NYSE:GS) buy initiation and a Morgan Stanley (NYSE:MS) high conviction call.
Microsoft’s cloud business is well-positioned to double in value, according to Goldman.
“Microsoft stands out very uniquely in the technology world given its strong presence across all layers of the cloud stack including applications platforms and infrastructure,” CNBC Pro reported Goldman as saying. “Our investment thesis is that Microsoft is well positioned to double its $60bn+ commercial cloud business (Azure, Office 365, Dynamics, and LinkedIn (NYSE:LNKD) Commercial) into a $120bn to $140bn business longer term.”
The firm set a price target of $285, which compares to the average $252, according to data compiled by Investing.com.
“Microsoft’s installed base of on premise Windows Servers (25-30mn GSe) alone represents $80bn to $90bn in potential Azure business. New customers and new workloads from existing customers would represent upside to this number,” StreetInsider reported Goldman as saying. The company is on the way to generating about $15.83 in earnings per share in 2026.
Morgan Stanley, meanwhile, sees one or more catalyst helping Microsoft’s price jump in the next 15 to 60 days, StreetInsider said.
“MSFT represents a rare combination of strong secular positioning AND a reasonable valuation in software. With shares lagging the overall software group over past 3 months, we see an attractive setup into the print,” Morgan Stanley wrote in a note.
Among their reasons: Covid-19 headwinds are easing to ease, strong PC shipment data and the potential for continued gross margin expansion in coming years. The firm has a price target of $260 on the Bill Gates-founded company. The shares are currently trading around $228.
