Wedbush analysts are reaffirming their bullish outlook on the AI revolution, asserting that the latest tech earnings season has solidified their thesis that AI is on the cusp of a massive breakthrough.
Despite market volatility and macroeconomic concerns, the earnings results have provided critical "validation data points" that support the anticipated "AI tidal wave of spending" set to sweep across the tech industry, says the investment firm.
Wedbush notes that while there were some soft spots, such as Amazon (NASDAQ:AMZN)'s "softer e-commerce guide, Alphabet (NASDAQ:GOOGL)'s "YouTube ad softness," and Intel (NASDAQ:INTC)'s "disaster performance," the overall tech earnings were "generally robust."
Wedbush argues that the strength of cloud computing, particularly from giants like Microsoft (NASDAQ:MSFT), Google, and Amazon, is laying the foundation for the AI-driven "4th Industrial Revolution," which is expected to lead to "massive software/application growth" and subsequent waves of AI adoption.
The note from Wedbush highlights the "massive AI strength" demonstrated by key players like ServiceNow (NYSE:NOW) and Palantir (NYSE:PLTR), both of which are critical in the next stage of AI deployments for enterprises.
Moreover, they believe AMD (NASDAQ:AMD) is poised to benefit from the growing AI capital expenditure, with Nvidia (NASDAQ:NVDA), led by CEO Jensen Huang, continuing to lead the charge in AI chip demand.
Wedbush likens the current moment to "the 1995 start of the Internet Moment," arguing that this is not another "1999 Tech Bubble-like moment."
"Rome was not built in a day and neither will this unprecedented AI Revolution. In a nutshell....This is not the time to panic on the tech trade as volatility has returned to the market after a wild few weeks," says Wedbush.
They emphasize that while the massive spending wave on AI may take time to materialize in top-line growth and margins, it is crucial to stay focused on the long-term potential. The tech earnings season, according to Wedbush, has only "bolstered and validated this bullish view of tech stocks" heading into 2025.