TLDR Goldman Sachs named Microsoft its top AI pick after meetings with senior company leaders. Microsoft remains on Goldman’s Conviction List with a Buy rating despite earlier 2026 weakness.
Microsoft (MSFT) stock has returned to focus after Goldman Sachs named Microsoft its top artificial intelligence pick. The call followed direct meetings with company leaders across Europe and San Francisco.
Goldman kept its Buy rating and Conviction List position despite Microsoft trailing several Magnificent 7 peers during parts of 2026. The bank said earlier strategic choices are now producing clearer results. Goldman introduced the Conviction List in 2023 to identify roughly 20 to 25 differentiated U.S. buy ideas.
Goldman met investor relations executives Jonathan Neilson and Danielle Criste in Stockholm, Zurich, and London. It also met Chief Financial Officer Amy Hood in San Francisco the previous week.
Those discussions supported Goldman’s view that Microsoft has greater flexibility after front-loading long-term capital spending. The bank also cited balanced investment across Microsoft applications and third-party customers.
Enterprise demand remains central to Goldman’s Microsoft stock view. A recent Microsoft stock upgrade also pointed to stronger Azure expectations after Stifel moved the shares to Buy.
Goldman said Microsoft’s fourth-quarter remaining performance obligations increased by $51 billion entirely from enterprise customers. That mix reduces dependence on demand from frontier AI laboratories.
Microsoft’s backlog reached $625 billion at the end of December 2025, up 110% from a year earlier. About 45% of that amount related to OpenAI.
Recent coverage of Microsoft’s AI spending reported fiscal-year capital expenditures of $145 billion. Goldman says earlier infrastructure spending now gives management more control over near-term investment decisions.
Goldman has maintained positive calls on Microsoft throughout 2026. In January, Goldman then set a $655 target before a key earnings report.
Its research has also tracked the Maia 200 chip, Azure capacity, AI agents, and Copilot. Goldman views these areas as parts of Microsoft’s wider enterprise AI strategy.
Microsoft is also restructuring its gaming operations as broader AI markets stay active. Nvidia chip demand has also drawn attention as technology companies expand computing capacity.
Microsoft announced about 4,800 global job cuts in July, with Xbox taking a large share. The Information later reported hundreds of additional Xbox cuts and studio consolidation under Activision.
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