Brief Summary
Dan Ives from Wedbush is super bullish on tech, especially with the AI boom. He thinks we're only in the early innings of this AI revolution, meaning there's still plenty of room for growth. He's particularly excited about Microsoft and Nvidia, seeing them potentially hitting even higher market caps. Software companies are also poised to catch up, and any dips in semiconductor stocks should be seen as buying opportunities.
- AI is driving a new wave of growth in tech.
- Microsoft and Nvidia are key players to watch.
- Software and cybersecurity are set to outperform.
- Semiconductor selloffs are buying opportunities.
- The AI revolution has a long way to run.
Bullish Outlook on Tech Earnings
Dan Ives believes this year's tech earnings will be very bullish, driven by the exploding use cases of AI. He highlights Microsoft, led by Nadella, as a key player, suggesting its market cap could jump from $4 trillion to $5 trillion, along with Nvidia, in the next 18 months. He emphasizes that this earning season will be a "prove it" moment for tech, but he doesn't anticipate any disappointments. He even predicts tech stocks could rise another 12 to 15% in the second half of the year.
Software Sector Catching Up
Software companies have been underperforming, but Ives sees them catching up, especially in the AI space. He mentions Palantir, MongoDB, and Snowflake as key names. He also points out IBM's resurgence due to AI modernization. Ives believes software and even cybersecurity could significantly outperform the broader tech sector in the second half of the year, driven by the expanding use cases of AI.
Microsoft's Growth Potential
Microsoft is already near all-time highs, and Ives thinks it has further to go. He believes Azure revenue is accelerating and could see a boost of 200-400 basis points. While AI's contribution to overall revenue is currently small, he expects it to grow significantly next year, potentially reaching 15-20%. Ives thinks the market is underestimating Microsoft's potential, setting a base case price target of $600 and a bull case of $700.
Semiconductor Opportunities
Ives acknowledges ASML's disappointing guide but suggests that any sell-offs in semiconductor stocks should be viewed as buying opportunities. He notes that demand for AI chips, particularly from Nvidia, still far outstrips supply, with a ratio of 10 to one. Based on their research in Taiwan, Wedbush believes the semiconductor sector is poised for a significant move higher in the next 3-6 months.
The AI Revolution's Trajectory
Ives believes we're only in the second inning of the AI revolution, suggesting the peak for stocks might not come until the sixth or seventh inning. This implies the run could continue through the end of this year and most of next year. He highlights that only a small percentage of enterprises have invested in AI, indicating a massive capex explosion is coming. He compares the AI boom to a party that's just getting started and advises buying these stocks, seeing the current quarter as the beginning of a golden age for tech stocks.
