Microsoft Stock ‘Table-Pounder’ Name To Own At Current Valuations, Says Analyst: Retail Mood Stays Dim On Macro Outlook

Microsoft stock is down about 8% for the year and has fallen over 17% since it hit an all-time high (intraday) of $468.35 on July 5. An analyst at Wedbush said the sell-off in the stock is way overdone.

Wedbush’s Daniel Ives said the weakness may have been due to worries about artificial intelligence (AI)-driven growth and perceived competitive pressure. However, the analyst’s channel checks with customers and partners in the Microsoft ecosystem showed an acceleration in deal flow that gave him increased confidence in the Azure growth over the coming years.

Ives noted that AI annual recurring revenue (ARR), which was at $13 billion in the December quarter, continued to track ahead of expectation

According to the analyst, Microsoft is a “table-pounder name to own at current valuations and one of the best ways to play the AI revolution theme over the coming years.”

The Wedbush analyst noted that Microsoft has been focusing on building an agentic world that would translate into real-time business outcomes. Organizations can securely build, deploy and scale AI agents that support multiple models with built-in enterprise-grade security, he added.

Ives said, “We believe this is the next step on the AI strategic vision for Microsoft and would not be surprised to see an accelerated M&A strategy to help drive this next software AI stack layer.”

The analyst estimates that over the next three years, 75% of the Microsoft installed base will ultimately be on the AI functionality, with 2025 likely to be the true inflection year of AI growth. 

He sees Microsoft’s AI revenue surpassing $15 billion on an annualized basis next quarter, underlining the “eye-popping” growth the company will likely see. This, according to the analyst, is not priced into the stock.

On Stocktwits, retail sentiment toward the Microsoft stock remained ‘bearish’ (37/100) and the message volume stayed ‘low’ as of the end of Wednesday.

MSFT sentiment and message volume March 19, as of 9:28 pm ET | Source: Stocktwits

A bearish watcher said Microsoft stock will experience weakness by Friday, blaming the directionless market for the predicament.

Another user squarely blamed the weakness on President Donald Trump’s policies and said they would short the stock and would get back into it when it reaches $320.

Microsoft ended Wednesday’s session up 1.12% at $387.82, with the upside coming on the back of a Federal Reserve rate decision and signals that aligned with expectations.

Ives maintained an 'Outperform' rating and $550 price target for the stock.

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