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Wedbush said it is expecting a strong second quarter earnings season for the tech sector, with cloud and AI spending the key drivers.
The top five Wedbush tech picks for the second half of the year are Nvidia (NASDAQ:NVDA) Meta Platforms (NASDAQ:META), Microsoft (NASDAQ:MSFT), Palantir Technologies (NASDAQ:PLTR), and Tesla (NASDAQ:TSLA).
Analysts led by Daniel Ives said they believe tech stocks will have a very strong second half of the year kicking off with a robust tech earnings season on the doorstep, with the “AI Revolution tailwinds” now accelerating across semiconductors, software, and the enterprise and consumer landscape.
“In our view the Street is underestimating the underlying AI driven growth ahead and we expect a very strong 2Q tech earnings season over the coming weeks that further validates our bullish thesis led by Big Tech stalwarts,” said the analysts.
The analysts noted that their bullish view is that investors are still not fully appreciating the “tidal wave” of growth on the horizon from the $2T of spending over the next three years coming from enterprise and government spending around AI technology and use cases.
We have barely scratched the surface of this 4th Industrial Revolution now playing out around the world led by the Big Tech stalwarts such as Nvidia (NASDAQ:NVDA), Microsoft (NASDAQ:MSFT), Palantir (NASDAQ:PLTR), Meta (NASDAQ:META), Alphabet (NASDAQ:GOOG) (NASDAQ:GOOGL) and Amazon (NASDAQ:AMZN),” said Ives and his team.
The analysts added that after a relatively strong few months navigating tariff and geopolitical storms, now tech stocks are poised to see another major move higher in the second half of 2025 led by the tech winners in this “golden age” for the tech world.
The analysts noted 2025 so far has been an inflection year within enterprise generative AI as true adoption has begun by going from idea to scale as more companies are looking to invest into AI to decrease costs/increase productivity.
“Looking forward, it’s all about the use cases exploding which is driving this tech transformation being led by software and chips into the rest of 2025 and beyond and thus speaks to our tech bull and AI Revolution thesis further playing out, over the next 12 to 18 months,” said the analysts.
Ives and his team believe that the Trump Administration will continue to soften its stance around tariffs and look to ink trade deals across the board including China, Japan, and India, that do not dramatically alter the current landscape for Big Tech and the AI Revolution, with Nvidia’s resumption of selling its H20 chips into China this week a key strategic positive for the tech space, the analysts added.
“While the first steps in AI deployments are around Nvidia chips and the cloud stalwarts, importantly we estimate that for every $1 spent on Nvidia, there is an $8-$10 multiplier across the rest of the tech ecosystem,” said the analysts.