Tech sell-off draws worries, but Wedbush maintains AI bull thesis
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While Tuesday’s tech sell-off resulted in massive reductions of market cap for Nvidia (NASDAQ:NVDA) and others, Wedbush stressed this is not a time to panic, as the artificial intelligence party is just getting started.
“While we recognize the bumpy macro/job data and the drumroll for the US Presidential elections into November, we view this sell-off in tech stocks as a buying opportunity for our core winners in this AI Revolution,” said Wedbush analysts, led by Daniel Ives, in an investor note.
Per every $1 spent on an Nvidia GPU, it creates an $8 to $10 multiplier throughout the broader tech sector, according to Wedbush.
“AI starts with Nvidia, but the ramifications for broader tech are essentially a 4th Industrial Revolution now being built out across semis, software, infrastructure, Internet and smartphones over the next 12 to 18 months,” Ives said.
Other tech companies poised to reap benefits from AI include Microsoft (NASDAQ:MSFT), Oracle (NYSE:ORCL), ServiceNow (NOW), Palantir (NYSE:PLTR), Salesforce (NYSE:CRM), Dell (DELL), IBM (IBM), Apple (NASDAQ:AAPL) and AMD (NASDAQ:AMD), according to Wedbush. What’s more, recent numbers from cloud providers such as Amazon Web Services(AMZN) and Google (GOOG)(GOOGL) demonstrate strong demand for enterprise AI initiatives.
“While investors may fret about this massive spending wave and frustrated that top-line growth/margins from these investments could take time to materialize, this ultimately speaks to our view this is a 1995 (almost 1996) start of the Internet Moment, and not a 1999 Tech Bubble-like moment despite bears getting louder during some of these head for the elevators tech sell-offs,” Ives added.