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Wall Street Is Underestimating Microsoft's AI Potential, Says Wedbush Analyst

MarketDash Editorial Team
10 hours ago
Wedbush's Dan Ives compares Microsoft to comedian Rodney Dangerfield, arguing investors are missing the massive AI growth story coming in 2026 as Azure deal momentum accelerates dramatically.

If you think Microsoft Corp. (MSFT) is just another tech giant coasting on its legacy business, Wedbush analyst Dan Ives has some choice words for you. In a recent CNBC interview, Ives compared Microsoft to Rodney Dangerfield, the comedian famous for his "I don't get no respect" routine. The analogy is pointed: despite dominating cloud computing and positioning itself at the center of the AI revolution, Wall Street is treating Microsoft with what Ives sees as unwarranted skepticism.

Why Microsoft Deserves More Credit

Ives isn't mincing words. He calls Microsoft a "table pounder" opportunity, arguing that the market is fundamentally mispricing the explosive growth happening inside Azure, Microsoft's cloud computing platform. "Investors give it no respect. It's almost a Rodney Dangerfield of software, the way they're treating it," Ives said in his December 22 interview.

The numbers behind his confidence are striking. Ives reports that his firm has tracked deal accelerations of 25% to 30% in just the last month. That's not a typo. And here's the kicker: only 3% of U.S. companies have fully embarked on their AI transformation journeys. If you're doing the math, that leaves a massive runway for growth. Ives believes the true "monetization" of AI technologies will hit its stride in 2026, which is basically tomorrow in investment terms.

Translation: Wall Street is looking at the wrong data or, more likely, underestimating how quickly enterprises will pour money into AI infrastructure. According to Ives, current street estimates for Microsoft's growth are too conservative by 15% to 20% for the coming fiscal year.

Tech Stocks Are Set for a Big 2026

Ives acknowledges that recent months have brought some "white knuckle moments" for tech investors. Valuations have faced pressure, and bearish sentiment has crept into the conversation. But he's adamantly bullish about what's coming next. He predicts that tech stocks broadly could surge 20% to 25% in 2026 as high-value AI use cases finally materialize at scale.

The bearish sentiment that's dominated recent weeks won't survive the new year, according to Ives. Wedbush maintains an 'Outperform' rating on Microsoft with price targets recently in the $600 to $625 range, suggesting the stock has significant upside from current levels.

The Nvidia Connection

Ives also pushed back hard against concerns about an AI bubble. His evidence? Look at Nvidia Corp. (NVDA), where demand for chips currently outstrips supply by a ratio of 12-to-1. That's not bubble behavior. That's a supply crunch driven by real, sustained enterprise demand.

"They're not going to win next year," Ives said, referring to the bears. His advice: look past short-term volatility and focus on the long-term AI revolution that's still in its early innings.

The Performance Puzzle

Here's where things get interesting. Despite all this bullish talk, Microsoft has actually underperformed the broader market in 2024. The stock is up 15.85% year-to-date, which sounds great until you realize the Nasdaq 100 has climbed 21.39% in the same period. Over the last six months, Microsoft has slipped 0.22%, and it's up just 11.41% over the past year.

The stock shows a stronger long-term price trend but weaker short and medium-term momentum, though it maintains solid quality fundamentals. This performance gap is precisely what makes Ives' thesis compelling. If he's right about the growth trajectory, Microsoft is trading at a discount to where it should be, given what's coming in 2026.

The setup is either a contrarian opportunity or a value trap, depending on whether you believe the AI monetization wave is real and imminent. Ives is clearly in the former camp, betting that Microsoft's "no respect" problem will solve itself once the numbers start rolling in.

Back to Stock Market News

Wall Street Is Underestimating Microsoft's AI Potential, Says Wedbush Analyst

MarketDash Editorial Team
10 hours ago
Wedbush's Dan Ives compares Microsoft to comedian Rodney Dangerfield, arguing investors are missing the massive AI growth story coming in 2026 as Azure deal momentum accelerates dramatically.

If you think Microsoft Corp. (MSFT) is just another tech giant coasting on its legacy business, Wedbush analyst Dan Ives has some choice words for you. In a recent CNBC interview, Ives compared Microsoft to Rodney Dangerfield, the comedian famous for his "I don't get no respect" routine. The analogy is pointed: despite dominating cloud computing and positioning itself at the center of the AI revolution, Wall Street is treating Microsoft with what Ives sees as unwarranted skepticism.

Why Microsoft Deserves More Credit

Ives isn't mincing words. He calls Microsoft a "table pounder" opportunity, arguing that the market is fundamentally mispricing the explosive growth happening inside Azure, Microsoft's cloud computing platform. "Investors give it no respect. It's almost a Rodney Dangerfield of software, the way they're treating it," Ives said in his December 22 interview.

The numbers behind his confidence are striking. Ives reports that his firm has tracked deal accelerations of 25% to 30% in just the last month. That's not a typo. And here's the kicker: only 3% of U.S. companies have fully embarked on their AI transformation journeys. If you're doing the math, that leaves a massive runway for growth. Ives believes the true "monetization" of AI technologies will hit its stride in 2026, which is basically tomorrow in investment terms.

Translation: Wall Street is looking at the wrong data or, more likely, underestimating how quickly enterprises will pour money into AI infrastructure. According to Ives, current street estimates for Microsoft's growth are too conservative by 15% to 20% for the coming fiscal year.

Tech Stocks Are Set for a Big 2026

Ives acknowledges that recent months have brought some "white knuckle moments" for tech investors. Valuations have faced pressure, and bearish sentiment has crept into the conversation. But he's adamantly bullish about what's coming next. He predicts that tech stocks broadly could surge 20% to 25% in 2026 as high-value AI use cases finally materialize at scale.

The bearish sentiment that's dominated recent weeks won't survive the new year, according to Ives. Wedbush maintains an 'Outperform' rating on Microsoft with price targets recently in the $600 to $625 range, suggesting the stock has significant upside from current levels.

The Nvidia Connection

Ives also pushed back hard against concerns about an AI bubble. His evidence? Look at Nvidia Corp. (NVDA), where demand for chips currently outstrips supply by a ratio of 12-to-1. That's not bubble behavior. That's a supply crunch driven by real, sustained enterprise demand.

"They're not going to win next year," Ives said, referring to the bears. His advice: look past short-term volatility and focus on the long-term AI revolution that's still in its early innings.

The Performance Puzzle

Here's where things get interesting. Despite all this bullish talk, Microsoft has actually underperformed the broader market in 2024. The stock is up 15.85% year-to-date, which sounds great until you realize the Nasdaq 100 has climbed 21.39% in the same period. Over the last six months, Microsoft has slipped 0.22%, and it's up just 11.41% over the past year.

The stock shows a stronger long-term price trend but weaker short and medium-term momentum, though it maintains solid quality fundamentals. This performance gap is precisely what makes Ives' thesis compelling. If he's right about the growth trajectory, Microsoft is trading at a discount to where it should be, given what's coming in 2026.

The setup is either a contrarian opportunity or a value trap, depending on whether you believe the AI monetization wave is real and imminent. Ives is clearly in the former camp, betting that Microsoft's "no respect" problem will solve itself once the numbers start rolling in.