Wedbush analyst Dan Ives is doubling down on Microsoft stock analysis, emphasizing that Microsoft (NASDAQ:MSFT) is a “table-pounding” buy at current levels. Despite recent sell-offs, Ives remains bullish on Microsoft’s long-term growth potential, particularly as it continues to dominate the artificial intelligence (AI) and cloud computing sectors.
Why Is Dan Ives Bullish on Microsoft Stock?
Ives believes that the recent dip in Microsoft’s stock price presents a compelling buying opportunity. Although Microsoft stock is down 6.4% year-to-date and 6.7% over the past year, Ives highlights that the company’s fundamentals remain strong. He views Microsoft as one of the best ways to capitalize on the AI revolution.
“Microsoft’s sell-off is a stark contrast to what we are seeing take place in the field despite market jitters,” Ives stated, pointing to the company’s growing dominance in AI, cloud computing, and enterprise software.
Strong Fundamentals Backing Microsoft
Microsoft’s solid fundamentals reinforce Ives’ bullish stance. Over the past decade, Microsoft has achieved a compound annual growth rate (CAGR) of 10.85% in revenue and 16.19% in earnings.
In Q2 of fiscal 2025, Microsoft reported:
Revenue: $69.6 billion, reflecting 12% annual growth.
Earnings per Share (EPS): $3.23, up 10% year-over-year.
Gross Margin: Maintained at an impressive 69%.
Net Cash from Operations: Increased to $22.3 billion from $18.9 billion a year earlier.
Cash Balance: $71.6 billion as of the end of the quarter.
Additionally, Microsoft returned $9.7 billion to shareholders in Q2 through dividends and share repurchases, demonstrating a commitment to delivering shareholder value.
Strategic Advantages Position Microsoft for Growth
Microsoft’s leadership in AI and cloud computing positions it for sustained long-term growth. The company generates an estimated $13 billion in annualized revenue from AI-related services, with strong enterprise interest reflected in commercial bookings and a remaining performance obligation (RPO) of approximately $300 billion.
Microsoft’s cloud division, which contributes about 37% of the company’s total revenue, holds a 20% market share, making it the second-largest player in the global cloud market. As businesses continue transitioning from on-premise infrastructure to cloud solutions, Microsoft is poised to capture increasing market share.
Copilot and Quantum Computing Propel Microsoft Forward
The rapid adoption of Microsoft’s Copilot platform underscores the growing demand for AI-driven productivity tools. Over 160,000 organizations have leveraged Copilot Studio, developing more than 400,000 custom agents in just three months — a twofold increase from the previous quarter.
Microsoft is also making strides in quantum computing with its Majorana 1 chip, capable of handling a million qubits of information. This advancement far surpasses International Business Machine’s (NYSE:IBM) leading quantum chip, which currently supports only 1,121 qubits.
High Switching Costs Create a Competitive Moat
Microsoft’s ecosystem creates high switching costs, making it difficult for enterprises to transition away from its products. Its widely used Windows operating system, Office 365 suite, and Azure cloud services ensure a deeply embedded user base, further strengthening its competitive position.
Analyst Sentiment: Strong Buy for Microsoft Stock
Dan Ives’ bullishness is echoed by many Wall Street analysts. Microsoft stock maintains a “Strong Buy” rating with a consensus price target of $506.83, implying a 29% upside from current levels. Of the 44 analysts covering the stock:
38 rate it as a “Strong Buy.”
4 rate it as a “Moderate Buy.”
2 have a “Hold” rating.
Conclusion: Should You Buy the Dip on Microsoft Stock?
Microsoft’s strong financials, leadership in AI and cloud computing, and continued innovation position it for long-term growth. Dan Ives and other analysts maintain a bullish outlook, viewing the recent dip as an attractive entry point for investors. With solid fundamentals and a robust growth strategy, Microsoft stock remains a compelling investment for those looking to capitalize on the future of AI and cloud technology.
Featured Image: Pixabay©efes
