Wedbush Reaffirms Outperform on Microsoft, Sets $625 Target as AI Growth Accelerates

Wedbush Securities has reiterated its Outperform rating on Microsoft Corporation (NASDAQ: MSFT) and maintained a $625 price objective, underscoring the firm’s view that the software and cloud provider sits at the center of an unfolding artificial-intelligence expansion.

The rating update was issued on December 22, 2025. In a client note, analyst Dan Ives described Microsoft as a “core winner” inside the brokerage’s IVES AI 30 list, a group of companies Wedbush believes are positioned to benefit disproportionately from enterprise adoption of generative AI. The brokerage emphasized that Wall Street continues to underestimate the scale of Microsoft’s cloud and AI opportunity, particularly around the Azure platform and the recently introduced Copilot suite.

Ives wrote that many investors remain skeptical about the durability of Microsoft’s AI-driven growth profile heading into 2026. Wedbush’s channel checks, however, point to “incrementally strong” customer deployments of both Azure and Copilot, leading the firm to project an additional $25 billion in revenue for Microsoft’s 2026 fiscal year. If realized, that figure would be additive to the company’s existing top-line expectations and could support further margin expansion.

Azure at the Center of the Thesis

Wedbush’s investment case rests largely on Azure, Microsoft’s cloud infrastructure service. The note contends that the Street is undervaluing Azure’s potential as businesses transition workloads toward AI-enabled applications. Increased demand for training and inference of large language models is expected to drive higher consumption of Azure’s compute and storage resources. Ives argued that this dynamic positions Microsoft “in the sweet spot” of enterprise AI rollouts, giving the company a strategic advantage over peers.

Azure has been a key pillar of Microsoft’s growth strategy for several years, registering double-digit revenue increases in recent quarters. The brokerage expects that momentum to persist as corporate customers expand spending on cloud-based data architectures required for advanced AI projects.

Copilot Rollout Gains Traction

Another component of the Wedbush outlook is the early market response to Copilot, Microsoft’s AI-powered assistant integrated across Windows, Microsoft 365 and several developer tools. According to the note, uptake among enterprise clients has been “stronger than anticipated,” signaling potential for incremental subscription revenue and greater engagement within Microsoft’s productivity ecosystem.

The research implies that Copilot could act as an additional catalyst for seat growth in Office 365 and related services, complementing Azure’s infrastructure revenue. Wedbush expects the combined effect of cloud consumption and AI-enhanced software licenses to become increasingly visible in Microsoft’s income statements over the next 12–18 months.

Maintained Position in IVES AI 30

Microsoft remains one of Wedbush’s preferred large-capitalization technology holdings. The company’s inclusion in the IVES AI 30 signals the firm’s confidence that Microsoft can benefit from what it calls a “fourth-industrial-revolution” cycle centered on generative AI. Other constituents of the list were not disclosed in the latest commentary.

In reaffirming the $625 price target, Wedbush is projecting share-price appreciation of roughly 35 percent from Microsoft’s closing level prior to the announcement. That target factors in anticipated revenue growth, margin expansion and continued share repurchases, according to the note.

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Context Within the Broader Market

Microsoft’s positioning in AI comes amid heightened competition among hyperscale cloud providers and software vendors. Alphabet, Amazon and other large technology firms have similarly highlighted AI capabilities as core to their future growth. Industry observers, including the U.S. National Artificial Intelligence Advisory Committee, have noted that enterprise adoption of generative AI remains in the early stages, suggesting a potentially long runway for revenue expansion across the sector.

Wedbush’s bullish stance on Microsoft contrasts with what it characterizes as lingering investor skepticism. The brokerage argues that market participants are still digesting the pace at which AI initiatives can translate into measurable financial performance. Ives believes that upcoming quarterly results may provide evidence that Azure and Copilot are beginning to shift Microsoft’s revenue mix more decisively toward higher-value AI services.

Company Background

Microsoft offers a portfolio that includes cloud computing, productivity software, enterprise security and developer platforms. Over the past year, the company has integrated generative AI across its product lines, focusing on practical use cases that improve efficiency, automate repetitive tasks and enhance data analysis for corporate users. The strategy aligns with Microsoft’s long-standing emphasis on recurring revenue and cloud-based delivery models.

In addition to the AI initiatives highlighted by Wedbush, Microsoft continues to invest in infrastructure expansion, including new data centers and specialized silicon designed for large-scale AI workloads. The company’s management has previously indicated that capital expenditures will remain elevated to support anticipated demand.

Wedbush’s latest research does not alter its overall risk assessment for Microsoft shares but reinforces its conviction that the company is well positioned to monetize AI adoption across a broad enterprise customer base. The brokerage plans to monitor Azure consumption trends, Copilot subscription metrics and margin performance as key indicators ahead of Microsoft’s next fiscal updates.

Crédito da imagem: Microsoft