[31] You will conceive and give birth to a son, and you are to call him Jesus. [32] He will be great and will be called the Son of the Most High. The Lord God will give him the throne of his father David, [33] and he will reign over Jacob’s descendants forever; his kingdom will never end.”
[34] “How will this be,” Mary asked the angel, “since I am a virgin?” [35] The angel answered, “The Holy Spirit will come on you, and the power of the Most High will overshadow you. So the holy one to be born will be called the Son of God."
Matthew describes Joseph's visit from an angel and Luke describes Mary's. Both were instructed to name the child Jesus. Matthew recorded the angel saying to Joseph that the reason for naming Him Jesus is because He will save His people from their sins, but Luke does not record the angel saying this to Mary. Instead he tells Mary that "He will be great and called the Son of the Most High." "Most High" is a title used for God in both the Old and New Testaments. "Son of the Most High" indicates Jesus's divine nature as the Son of God, as well as Him being the promised Messiah. His Messiahship is revealed to Mary in what he says to her next: "The Lord God will give him the throne of his father David, [33] and he will reign over Jacob’s descendants forever; his kingdom will never end.” This was God's promise to David:
2 Samuel 7:11-16 NIV
[11b] ... I will also give you rest from all your enemies. “ ‘The Lord declares to you that the Lord himself will establish a house for you: [12] When your days are over and you rest with your ancestors, I will raise up your offspring to succeed you, your own flesh and blood, and I will establish his kingdom. [13] He is the one who will build a house for my Name, and I will establish the throne of his kingdom forever. [14] I will be his father, and he will be my son. When he does wrong, I will punish him with a rod wielded by men, with floggings inflicted by human hands. [15] But my love will never be taken away from him, as I took it away from Saul, whom I removed from before you. [16] Your house and your kingdom will endure forever before me; your throne will be established forever.’ ”
Mary and Joseph were both descendants of David and therefore Jesus was "flesh and blood" and could be called a "son" of David. They were also both from the tribe of Judah, the tribe through which God said the Messiah would come.
The angel also told Mary that the child would reign over Jacob’s descendants forever. Well, Jacob was renamed Israel, so Jacob’s descendants are Israel. However, most Israelites, or Jews (descendants of Judah or practitioners of Judaism) during Jesus's time, rejected Him as their Messiah and many still do today. As He stood trial before Pontius Pilate they proclaimed, "We have no king but Caesar!" So how then could Jesus reign over Israel forever? Simply, as Paul said, those who have faith like Abraham are the true Israel and the circumcision. Those who have faith in Jesus know that He is the King and He will reign over them forever. Just as He promised David, God began establishing Jesus's kingdom when He was here, and He continues to do so through the Holy Spirit and His people. And, just as God promised David that He would be the Father of his descendant through whom He would establish His eternal kingdom through, Jesus is the Son of God, fulfilling God's promise to David.