Milan meet Cagliari today sitting in seventh place on the Serie A table.
Stam told La Gazzetta dello Sport: "Milan is growing and the development of the project is going very well. In Serie A they are not yet at the top of the table, but they will have the chance to get closer to the top positions: only three months have been played and there are still many days left.
"Dreaming of the Scudetto? Yes, because the others will also drop points on the road. Sooner or later, it happens to everyone in the course of a championship.
"There is no need to be worried or disappointed. This team will improve and show all its qualities. When you change coaches you have to be patient, but Milan has players capable of making the difference."
On fellow Dutchman Tijjani Reijnders, Stam added: "Tijjani can do everything: he is good at launching, carrying the ball and getting out of the pressing, but he also knows how to finish. I'm not saying he is already one of the best midfielders in the world, but he will become one because I am convinced that we have not yet seen his full potential.
"Milan are right to hold on to him because the top clubs in the Premier League will probably already be following him."