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Wedbush Securities analyst Dan Ives sees a “massive” tech rally upcoming, thanks in part to “transformational” growth spurred on by artificial intelligence.
Ives leaned heavily on hyperbole and capital letters in a note in which he said he fears not the macro environment and expects the tech sector to prosper over the coming year.
“[Third-quarter] earnings over the coming weeks will be an eye opener for the Street as the transformational AI growth and stabilizing IT spending environment will create a massive tech rally heading into year-end in which we expect tech stocks to be up another 12%-15% in 4Q,” Ives and his team wrote in a note.
Fourth-quarter earnings should be a sneak peak at a “major rebound in growth across the tech sector in 2024,” he added.
He urged investors that now is not a time to panic and that Wall Street is underappreciating growth in AI, cloud, cyber security and the rebound of digital ad dollars.
Ives added that he believes the Federal Reserve will cut rates next year and the near-term obsession with the 10-year U.S. Treasury will dissipate as yields move lower and an economic soft landing takes place in 2024.
Plus, the analyst sees $1T of tech spending on the horizon over the next decade.
“Over the past few decades covering tech stocks we have always used macro jitters/agita, Fed jawboning, and bond vigilantes taking over the narrative as opportunistic times to buy the best quality growth tech stocks and THIS TIME IS NO DIFFERENT,” Ives said.
Wedbush’s favorites include: Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT), Palo Alto Networks (PANW), Zscaler (ZS), and MongoDB (MDB).
“The key is use cases for AI are exploding from all of our work/findings in the field across verticals and now we enter the next phase of AI spend with hyperscale players Microsoft (MSFT), Google (NASDAQ:GOOG) (NASDAQ:GOOGL) and Amazon (AMZN) set to benefit from this massive wave of enterprise spending now underway with momentum into 2024,” Wedbush said.
“The impact of the AI cycle on consumer internet will be massive and it will start w/ the cloud service divisions, Amazon’s AWS and Alphabet’s GCP,” Wedbush said. “On this theme, we continue to like Amazon (AMZN), Alphabet (GOOG) (GOOGL) and Meta (META) as our favorite tech plays.”
