Goldman Sachs: Microsoft's AI Monetization Path Becomes Clearer, Stock Posts Biggest Single-Day Gain in Nearly 18 Years
Alina Collins
Microsoft surged 17.5% to $458, its largest single-day gain in nearly 18 years; Goldman analyst Gabriella Borges says AI spending now has clear monetization paths and raised her target to $640 — implying roughly 64% upside.
What triggered this rally?
Microsoft's Wednesday earnings showed cloud revenue growing at its fastest pace since 2022, with AI and compute services winning customer adoption.
Capital expenditure growth showed signs of slowing. This means → the market's worst-case "bottomless cash burn" scenario did not materialize — spending is starting to yield returns.
Goldman's Borges kept her "buy" rating and raised her 12-month target by nearly 5% to $640, implying about 64% upside from Wednesday's close.
What do the Copilot numbers tell us?
Microsoft disclosed that 365 Copilot paid seats topped 30 million, up from roughly 20 million three months earlier. In plain terms = about 10 million net new paying users in a single quarter — adoption is accelerating.
Borges noted that one of the market's core bear arguments had been that Copilot "wasn't good enough."
She argues product quality keeps improving and rising user numbers help create a "positive feedback loop" — more users generate richer data, which improves the product, which attracts still more users.
Microsoft vs. Google on enterprise AI — who leads?
Borges acknowledged that Alphabet currently dominates enterprise AI — nearly 90% of Fortune 100 companies already use Google's Gemini enterprise edition.
But she expects the next 12 months to show the gap is "not as bad as people think," and that Microsoft has made "quite significant improvements behind the scenes."
This reflects expectations that had been pushed too low — Borges frames Microsoft as a "value-discovery" name, admitting it spent "multiple quarters in the doghouse."
What should investors watch next?
The key validation point: whether Copilot's mass adoption can keep translating into quantifiable revenue growth in coming quarters.
This means → the rally prices in the *expectation* of a clearer monetization path, not profits already banked. If Copilot's revenue contribution fails to keep pace with user growth over the next quarter or two, the stock faces pullback pressure.
Borges cited Goldman's own experience, saying the firm has made "significant progress" using AI tools over roughly the past year — but the distance from anecdotal gains to industry-wide revenue data is still real.
Content is for reference only, not financial advice.