Tech stocks may climb 10% to 12% in the second half of the year, Wedbush’s Dan Ives said. The sector is poised for a “1995 moment” similar to the boom that followed the advent of the internet. Unlike some skeptics, Ives doesn’t think tech stocks are about to burst like they did in 1999. Loading Something is loading.
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Tech stocks are shaping up for a long-term rally and could climb 10% to 12% in the second half of this year, Wedbush Securities’ Dan Ives wrote in a Monday note.
The forecast comes as tech stocks have already had a big year on hype over artificial intelligence. The Nasdaq has jumped 27% year to date, as AI enablers like Nvidia have soared.
“With massive cost cutting across the tech sector the last 9 months, stable enterprise spending, and a resilient consumer, we believe the stage is set for a ‘1995 moment’ as AI is the most transformational technology we have seen since the Internet started to take shape,” Ives said.
What is not happening is a “1999 moment,” he added, rejecting the idea that the tech surge is entering a bubble reminiscent of the dot.com era collapse.
Skeptics may point to the sector’s high valuations as the basis for the bearish sentiment, but Ives disagrees.
“The massive $800 billion AI opportunity (our estimate) is now on the doorstep for the tech sector for the next decade and real monetization of AI is happening much sooner than expected with Nvidia’s recent guidance and our channel checks giving further confidence in our AI bullish sector call that kicked off in early January,” he wrote.
According to the note, Microsoft and chipmaker Nvidia are leading the pack, but other companies will also fuel the growth, including Google parent Alphabet, Oracle, Amazon, Salesforce, Palantir, IBM, Meta and C3.ai.
Ives’s upbeat view on tech stocks is also based on expectations that the Federal Reserve is nearing the end of its hiking cycle, and that interest rates may soon be cut.
“In a nutshell, while valuations in tech will be front and center, we continue to believe AI is driving the tech sector to a ‘1995 moment’ with a long runway of growth ahead that we have not seen since the 1990’s,” he concluded. “This is an execution story and an AI Arms Race as now tech vendors across the software/chip/digital media ecosystem must identify the use cases and build platforms around ChatGPT/other AI models that will transform many industries for years to come in our opinion.”
Wedbush isn’t the first to look forward to significant growth in the tech sector. Last week, Ed Yardeni predicted an AI-spurred “Mother of all Melt-ups,” a massive upswing in the tech sector.
Other investors are also positioned bullishly on the stocks, with billionaire Stanley Druckenmiller having snapped up $430 million of Nvidia and Microsoft shares in the first quarter. Recently, he said that Nvidia is worth holding for a few years, as it will be as transformational as the internet.