Microsoft Corp. (MSFT) is gearing up for what could be a pivotal AI-driven inflection point heading into 2026, and some investors might be sleeping on the opportunity.

Wedbush analyst Dan Ives thinks the skeptics have it wrong. He's reaffirmed his Outperform rating and $625 price target on the stock, arguing that Microsoft is "in the sweet spot of enterprise strategic AI deployments" as a hyperscaler cloud powerhouse.

The thesis here is pretty straightforward: Wall Street seems to be underpricing what's coming next. Ives believes the current share price doesn't capture "the next wave of cloud and AI growth in 2026." The company's competitive advantage lies in its massive installed base, which gives it a strong foothold as enterprise customers shift toward AI-powered solutions.

The numbers back up the optimism. Recent field checks reveal that more than 70% of Microsoft's installed base is expected to be leveraging enterprise and commercial AI functionality within the next three years. That's a substantial shift that could fundamentally change the company's growth trajectory, according to Ives.

In short, Wedbush sees Microsoft as one of its favorite large-cap tech names to own right now. The AI story is just getting started, and 2026 could be the year that surprises a lot of people.

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