Nvidia, Microsoft leading AI Revolution with tech set to rally into year-end: Wedbush

In the mind of Wedbush Securities, Nvidia (NASDAQ:NVDA) and Microsoft (NASDAQ:MSFT) continue to lead the artificial intelligence revolution and new evidence suggests that the AI infrastructure market could grow 10 times between now and 2027.

“The supply chain is seeing unparalleled demand for AI chips led by the Godfather of AI Jensen and Nvidia and ultimately leading to this tidal wave of enterprise spending as AI use cases explode across the enterprise,” analyst Dan Ives wrote in a note to clients. “We believe the overall AI infrastructure market opportunity could grow 10x from today through 2027 as this next generation AI foundation gets built, with our estimates [showing] a $1 trillion of AI cap-ex spending is on the horizon [over] the next 3 years.”

AI gets ‘top priority’

AI related spending has increased spending across much of the tech supply chain, with generative AI projects in the enterprise are being launched on a regular basis, Ives said. This suggests that AI projects and initiatives around AI are getting “top priority” within many IT budgets for 2025, which may unlock a number of AI use cases not yet seen.

“While Nvidia and Microsoft are the core drivers of AI now we are seeing many other tech stalwarts join the AI Party including Oracle, ServiceNow, Palantir, Salesforce, Dell, IBM, Apple, AMD among others,” Ives added. “In a nutshell we believe the stage is set for tech stocks to move 10%+ higher into year-end and another 20% in 2025 with this tech bull market just hitting its next phase led by the AI Revolution.”

For every $1 spent on Nvidia GPUs, there is a multiplier of $8 to $10 across the tech sector, Ives said. And while the company has changed the global landscape thanks to its GPUs, AMD (AMD) and others are catching up, just in time for the $1T of AI capex spending over the next few years.

“The cloud numbers and AI data points we are hearing from our field checks around Redmond, Amazon, and Google indicates massive enterprise AI demand is hitting its next gear as use cases explode across the enterprise landscape,” Ives added.