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The 24-year-old has built on an encouraging first year with the club to establish himself as a key member of Nuno Espirito Santo's squad this season.
Traore has featured in 52 games for Wolves in 2019-20, scoring six goals while also providing 12 assists.
His performances helped the team secure a seventh-place Premier League finish, and he will be back in contention for a place in Santo's line up when they take on Olympiacos in their Europa Leagueround of 16 second-leg tie on Thursday.
Lescott certainly believes the talented attacker has the ability to play for one of England's top two clubs, after seeing him hone his skills at Molineux and add a "final product" to his game.
The former City defender told Football Index: "Adama Traore has the ability to play for any side in club football. Traore could easily play for a Manchester City or Liverpool. I have never seen such speed and strength on a football pitch before.
"Before this season, there were question marks over his game management and his final product, but he has really improved over the last 12 months.
"Traore has simplified his game and has taken his foot off the pedal. He used to sprint at his absolute fastest to beat defenders which meant he had no time to deliver a telling cross or shot.
"He now beats defenders only running at 80% which has given him that extra bit of time he needs to make the position count with a goal or assist. He was a star in the Premier League this season."
One man who now looks destined to complete a move to City is Bournemouth defender Nathan Ake, with Goal reporting that a £40 million ($52m) deal will likely be finalisedin the coming days.
Lescott thinks the 25-year-old will be valuable addition to Pep Guardiola's ranks due to a combination of his Premier League experience and technical ability.
"I think Nathan Ake would be a very good signing for Manchester City if he does sign," the former England international added."He’s an established Premier League defender and while Bournemouth were relegated, Ake has proven to be more than capable at this level.