Wedbush said the tech sell-off is a buying opportunity after “another very rough and brutal day for tech investors,” on Thursday.
“Yesterday was another very rough and brutal day for tech investors as a risk-off rally on tech AI stalwart names such as Tesla (TSLA), 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 added that it’s been building a “whiteknuckle moment” for tech stocks that hit a turbulent moment starting a few weeks ago during earnings season when Palantir Technologies (PLTR) put up off-the-charts eye-popping growth numbers and blew away Street estimates, but the stock sold off hard the next day.
“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 the Burry short tweet adding to the agita. In a nutshell, we view this as a short lived mini panic moment for tech stocks as we believe tech stocks will have a major rally 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 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 expenditure 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.
“This is an AI Arms Race and what is fueling this next chapter of growth is Big Tech spending andthat is NOT slowing down into 2026 with Cisco bullish quarter/guidance another positive data point this week….which we view as a huge positive and validation moment for the AI Revolution bullish thesis,” said Ives and his team.
The analysts believe Nvidia’s (NVDA) earnings next week will be another major validation moment for the AI Revolution and be a positive catalyst for tech stocks into year-end as investors continue to underestimate the scale and scope of AI spend.