Microsoft (MSFT) is likely to “surprise” Wall Street with how strong its artificial intelligence-related growth will be, Wedbush Securities said.
“The Street is underestimating the Azure growth story in our view and AI driven shift about to happen in Redmond heading into 2026 making Microsoft one of our favorite large cap tech names to own over the coming year,” Wedbush analyst Dan Ives wrote in a note to clients. “Investors remain skeptical of Microsoft’s AI driven growth profile, which is setting the stage for [Satya] Nadella & Co. to prove the doubters wrong, as this hyperscaler cloud stalwart is in the sweet spot of enterprise strategic AI deployments.”
Ives, who has an Outperform rating and $625 price target on Microsoft, added that recent checks have been “incrementally strong” around the deployment of Azure and Copilot among Microsoft customers. As such, that could boost Microsoft’s revenue in fiscal 2026 by another $25B, Ives added.
“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,” he explained.
