Last week was marked by substantial volatility in technology stocks as earnings reports from Alphabet (NASDAQ:GOOGL) and Tesla (NASDAQ:TSLA) triggered a sharp sector sell-off, raising concerns across Wall Street that the tech bull market might be facing turbulence.
With Microsoft (NASDAQ:MSFT), Amazon (NASDAQ:AMZN), Meta (NASDAQ:META), and Apple (NASDAQ:AAPL) all set to report their earnings, the upcoming week is crucial for the tech earnings season, Wedbush analysts said in a note.
They believe these Big Tech companies are set to demonstrate accelerated AI-driven capital expenditures, and strong enterprise and consumer tech spending trends, and ultimately convince investors that the path to AI monetization will drive Street estimates higher for 2024 and 2025.
"The tech sell-off seen last week will be short-lived as the Street better digests results and commentary from the broader tech sector over the coming weeks during 2Q earnings season,” Wedbush analysts wrote.
"This is the start, not the end of this tech bull run we expect over the next few years. We estimate that companies, utilities, and governments will spend over $1 trillion combined in AI capex over the coming years, fueling this AI Revolution,” they added.
As its latest report showed, Alphabet is accelerating its spending on the AI cycle, and Wedbush analysts expect similar comments from other Big Tech companies.
They believe that this week and the rest of the 2Q earnings season will serve as a major positive catalyst for the tech stocks, expecting them to rise another 15%-20% for the year, adding to the robust gains seen in the first half of 2024.
With the broader tech growth story now taking center stage, Big Tech names are "taking the torch this week aiming for a gold medal with all the Street watching,” analysts concluded.