Microsoft Corp (NASDAQ:MSFT) is preparing for a significant AI-driven shift heading into 2026.



This shift will make the company &#34;one of our favorite large cap tech names to own,&#34; according to Wedbush.



The Microsoft Analyst: Analyst Dan Ives reaffirmed an Outperform rating and a $625 price target.



The Microsoft Thesis: Investors who are skeptical of Microsoft and its “AI-driven” growth profile may be proved wrong. Ives says this “hyperscaler cloud stalwart is in the sweet spot of enterprise strategic AI deployments.”



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The Street seems to be underestimating Microsoft's Azure growth story, he explains. The current share price does not reflect &#34;the next wave of cloud and AI growth in 2026,” he adds. Microsoft boasts a “strong competitive cloud edge in its massive installed base.”



The latest field checks indicate that more than 70% of the company's installed base will be &#34;on this AI functionality for the enterprise/ commercial&#34; in the next three years, Ives mentioned. This changes the landscape and Microsoft's growth trajectory going forward, he added.



MSFT Price Action: Shares of Microsoft had declined by 0.26% to $484.64 at the time of publication on Monday.



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Microsoft is expected to see significant AI-driven growth by 2026, according to Wedbush analyst Dan Ives. He reaffirmed an Outperform rating and a $625 price target for the stock. Ives believes Microsoft's Azure growth and AI deployments are underestimated by the market. Over 70% of Microsoft's installed base is expected to adopt AI functionality within three years, changing the company's growth trajectory.

- Microsoft Corp is poised for an AI-driven transition as it heads into 2026, with analysts highlighting its potential.  
- Analyst Dan Ives maintains an Outperform rating and a $625 price target, suggesting that skepticism about Microsoft's AI growth may be misplaced.  
- With over 70% of its installed base expected to adopt AI functionalities by 2028, Microsoft's Azure growth is seen as underestimated, indicating a favorable outlook for the company.

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This Microsoft Analyst Expects 2026 To Be A 'Big AI Driven Growth Year' That Will Surprise Investors