Amid the technology sector's pivot to artificial intelligence (AI), Microsoft Corp (MSFT  ) investors have benefitted from the company's push toward AI. A Goldman Sachs analyst noted encouraging signs that Microsoft's investments in AI will pay off as the technology rolls out.

The Microsoft Analyst: In a note published Monday night, Kash Rangan reiterated his Buy rating for Microsoft with a price target of $515.

Main Takeaways: Rangan is encouraged by Microsoft's wide product range and use cases.

"With a strong presence across all layers of the cloud stack, including applications, platforms and infrastructure, Microsoft is well positioned, in our view, to capitalize on a number of long-term secular trends, such as Gen-AI, public cloud consumption, SaaS adoption, digital transformation, AI/ML, BI/analytics, and DevOps (amongst others)," the analyst said.

The analyst compared the company's foray into GenAI with its previous investment and rollout of Microsoft Azure. The company currently reaps substantial revenue from Azure higher than its total capital expenditures.

While it took Azure seven years to reach critical scale (CapEx/revenue below 300%), GenAI investments are further along just one year into its build-out. The analyst pegged Microsoft's AI-related buildout as already having a capital expenditure intensity similar to Azure four to five years after launch.

"Across the 10+ year cloud transformation, Microsoft showed a willingness to invest purposefully and aggressively ahead of the revenue opportunity they saw," Rangan said. "We believe Microsoft's current investment cycle underpins the same level of conviction in the promise of Gen-AI. Five quarters in, we see this playing out well..."

MSFT Price Action: Microsoft traded at $450.44, up 0.53% at the time of publication Tuesday.