Wedbush said that there may be near-term concerns in the tech bull market but “tech stocks will [be] up another 8%-10% into the rest of the year as investors look to play the AI Revolution.”
“This past week was a nervous week for tech investors as a risk-off rally on tech AI stalwart names such as Microsoft (MSFT), Palantir (PLTR), Nvidia (NVDA) among others has put some near-term concern in this tech bull market,” said analysts led by Daniel Ives.
The analysts noted that last week Palantir Technologies (PLTR) “put up off the charts eye-popping growth numbers and blew away Street estimates…and the stock sold off hard the next day.”
The analysts added that this added to fears around the “AI Bubble” talk from the bears along with worries about Nvidia China revenues being shut off and fears of the “too big to fail” OpenAI chatter…with Michael Burry’s short tweet adding to the concerns.
“In a nutshell, we view this as a short lived white knuckle moment for tech stocks as we believe tech stocks will [be] up another 8%-10% into the rest of the year as investors look to play the AI Revolution and the 2nd/3rd/4th derivatives now playing out across consumer and enterprise names,” said Ives and his team.
The analysts noted that overall the most important takeaway from the third quarter tech earnings season is robust cloud numbers from Microsoft, Amazon (AMZN), and Alphabet (GOOG) (GOOGL) with a major step up in capital expendiure into 2026 led by Meta Platforms (META) and the other tech stalwarts.
The analysts believe Big Tech cap-ex could approach $550B to $600B in 2026 from around $380B this year as the next stage of the AI trade takes hold.
Ives and his team added that Palantir is the best barometer of AI use cases on the enterprise front and the U.S. commercial growth blew away Street estimates and speaks to more companies accelerating their AI endeavors, which will also be seen with Snowflake (SNOW) and MongoDB (MDB) results.
“This is an AI Arms Race and what is fueling this next chapter of growth is Big Tech spending and that is NOT slowing down into 2026….which we view as a huge positive and validation moment for the AI Revolution bullish thesis despite some investor angst over the last few weeks,” said Ives and his team.