Why Wedbush expects a big AI-driven growth year for Microsoft

Investing.com -- Wedbush expects Microsoft to deliver a major acceleration in growth driven by artificial intelligence, arguing the market is underestimating the scale of the opportunity heading into 2026.

In a note to clients on Monday, Wedbush analyst Dan Ives said the firm believes “the Street is underestimating the Azure growth story” and the “AI-driven shift about to happen in Redmond heading into 2026,” positioning Microsoft as one of its preferred large-cap technology names.

Wedbush maintained its Outperform rating and $625 price target, calling Microsoft a “core winner” within its AI-focused coverage.

Ives stated that investor skepticism around Microsoft’s AI growth profile has created room for upside surprises, with the company sitting “in the sweet spot of enterprise strategic AI deployments.”

According to Wedbush, the stock “still has yet to price in” what it views as the next wave of cloud and AI-driven expansion.

Partner checks cited by the firm have been “incrementally strong around Copilot and Azure deployments,” with the firm estimating this momentum could “add another ~$25 billion to Redmond’s top-line trajectory by FY26.”

“Our thesis remains that the cloud and AI monetization is going to comprise a bigger and bigger piece of Redmond going forward and will ultimately spur growth and margins over the coming years,” the analyst wrote.

Microsoft is seen as “the clear front-runner on the enterprise hyper-scale AI front,” despite competition from Amazon and Google.

The firm added that over the next three years, “over 70% of its MSFT installed base will ultimately be on this AI functionality,” fundamentally altering the company’s growth profile.

“We believe Microsoft is set to have a massive 2026 and the stock is a compelling buy at these levels given the key foundational role Redmond will play in this next stage of the AI Revolution buildout,” declared Ives. “We believe the tech bull market continues into 2026 with AI the core driver.......and Microsoft is set to be a major beneficiary of this 4th Industrial Revolution.”

You May Also Be Interested In