A multi-stage precipitation model is formulated to predict the microstructural evolution and explain the high performance of additive friction stir deposited aluminum alloy 7050 (AA 7050) for hole repair. The first stage is the heating process due to the high-temperature thermomechanical process of the stir. In this process, small η precipitates dissolve as they lose their stability with increasing temperature, and this causes the volume fraction of η precipitates to decrease and the concentration of Mg and Zn in the matrix to increase. The second stage is the cooling process at the end of the repair where material feeding ends and the tool is lifted away. Heterogeneous nucleation of η precipitates may occur and as the temperature cools below 250 °C, Guinier–Preston (GP) zones start to form. The final stage is the natural aging process, where the η′ precipitate starts to grow. The volume fraction and precipitate radius are predicted for each type of precipitate. Furthermore, the fine η′ precipitates and GP zones with a decent volume fraction improve the material strength and fatigue life.