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Pro Analysis

Goldman says buy Microsoft because of its fast-growing cloud business

Scott Guthrie, executive vice president of the cloud and enterprise group at Microsoft Corp., speaks during a keynote session at the Microsoft Developers Build Conference in San Francisco, California, U.S., on Thursday, March 31, 2016.
David Paul Morris | Bloomberg | Getty Images
Scott Guthrie, executive vice president of the cloud and enterprise group at Microsoft Corp., speaks during a keynote session at the Microsoft Developers Build Conference in San Francisco, California, U.S., on Thursday, March 31, 2016.

Investors should buy Microsoft stock because earnings will top expectations in coming years due to its cloud computing business, according to Goldman Sachs.

The firm upgraded the shares of the technology company to buy from neutral.

"We believe the shares are poised to more consistently outperform in the year ahead on the back of sustained traction in its Cloud offerings (Azure and Office 365) overlaid by steady albeit not spectacular performance out of its legacy PC-linked software business," analyst Heather Bellini wrote in a note to clients Wednesday.

"We have high conviction in our above consensus revenue and non-GAAP EPS forecasts for the next few years."