Goldman Sachs predicted today that Microsoft's (MSFT) earnings growth would jump to 17% in its fiscal 2026, up from 10% in FY25.

The investment bank trimmed its price target on MSFT to $450 from $500 but kept a Buy rating on the shares.

A development team working together to create the next version of Windows.

MSFT's FY26 Drivers

Microsoft's profits next year should be lifted by its AI inference offerings, which tend to have high margins, Goldman Sachs stated. Also positive for MSFT will be its revenue-sharing deal with OpenAI and the transition of AI to platforms and applications, the investment bank believes.

Other Positive Catalysts for MSFT

Goldman expects the revenue of Azure, MSFT's cloud-infrastructure unit, to come in slightly above expectations for the current fiscal year, and it predicts that the company's overall FY25 earnings per share will also be a bit above analysts' average estimate.

Also noteworthy is that Goldman predicts that MSFT's capital expenditures will jump 20% in FY26. The prediction comes amid rumors of the tech giant cutting its capex growth.

The Recent Price Action of MSFT Stock

In the last month, the shares have fallen 1.6%, while they are down 14% in the last three months.

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Disclosure: None. This article is originally published at Insider Monkey.