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Artificial intelligence has become the topic of the year in capital markets, regulation and is fully embedded into mainstream conversations seemingly every day. As the field continues to encroach further, it’s becoming clearer to some that it is more akin to a moment for technology not seen since the mid-1990s, when the internet exploded in popularity and transformed the entire planet.
“The massive $800 billion AI opportunity 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 January,” Wedbush Securities analyst Dan Ives wrote in a recent investor note.
Ives added that tech stocks are likely to continue moving higher this year, perhaps to the tune of 10% to 12%, especially as the Federal Reserve slows down its interest rate hikes and the integration of AI into everything is looking more like the next Industrial Revolution.
“This speaks to a strong year for tech stocks in 2023 so far that we believe should continue as the risk-on trade gains momentum with investors focused on the AI Revolution and the positive ripple impacts for software, consumer digital advertising names, and the chip sector with Nvidia dominating,” Ives added.
Perhaps the two biggest beneficiaries of the AI craze on Wall Street are Nvidia (NASDAQ:NVDA) and Microsoft (NASDAQ:MSFT), which have seen their shares rally nearly 200% and 40% year-to-date, respectively. Nvidia has benefited from the continued adoption of its accelerator GPUs for use in large language model training, while Microsoft has exploited its partnership with OpenAI by incorporating ChatGPT into nearly every single product.
However, there are a number of other companies that are likely to benefit from the continued AI craze, Ives believes, including Apple (AAPL), which recently introduced the Vision Pro spatial computing headset that relies heavily on AI integration.
Other tech stalwarts such as Amazon (AMZN), Oracle (ORCL), Google (GOOG) (GOOGL) and Meta Platforms (META) are also expected to benefit, Ives posited. Smaller tech companies should also see their share of gains from the “AI arms race,” Ives said, including MongoDB (MDB), Snowflake (SNOW), C3.ai (AI), Palantir Technologies (PLTR) and Salesforce (CRM).
It’s inevitable that there will be some bumps along the way for many of these companies and the long-term impact of AI on humanity is still unknown, though many believe the benefits will outweigh the costs.
However, Ives believes there is a “long runway of growth ahead” for the field not seen in nearly 30 years and many of these companies are operating and executing well across multiple sectors as they continue to identify use cases to incorporate the tech.
“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,” Ives said.
