AI Boom: Wedbush Securities sees a 1995-like moment before the internet breakthrough

shares in this article

indexes in this article

• Tech sector poised for a 1995 moment
• Tech surge will not result in a bubble like in 1999
• Tech stocks like Microsoft and NVIDIA are benefiting from the AI ​​boom

“1995 moment”: Ready for AI boom

Daniel Ives, managing director and senior equity research analyst at Wedbush Securities, recently stated that tech stocks are in a “1995 moment” and ready for the AI ​​boom. As Markets Insider reports, citing a note from the analyst, Ives believes that AI stocks could rise by 10 to 12 percent in the second half of this year. But in the past few weeks and months, tech stocks have seen significant growth due to the big AI hype. The NASDAQ Composite has risen by around 31 percent in the year to date, as AI providers such as NVIDIA have experienced a real boom.

“With massive cost reductions across the tech sector over the past 9 months, resilient corporate spending and a resilient consumer, we believe the stage is set for a ‘1995 moment’ as AI is the most transformative technology we’ve seen since the dawn of the internet seen,” explains Ives. However, he doesn’t think a “1999 moment” – that is, that the rise in tech flows into a bubble that is reminiscent of the collapse of the dot.com era – is likely.

Long growth perspective and AI arms race

While skeptics cite the sector’s high valuations as the reason for a more bearish sentiment, Ives disagrees. The “massive $800 billion opportunity” (estimate by Wedbush Securities) is just around the corner for the tech sector within the next decade. In addition, the monetization by AI much earlier than initially expected and the latest forecasts from NVIDIA as well as the investment bank’s channel checks would further boost confidence in the AI ​​bullish sector call.

In addition, the analyst’s optimistic view is based on the expectation that the Federal Reserve is nearing the end of its rate-hike cycle and that interest rates could be cut soon. “In short, while tech valuations will be at the forefront, we continue to believe that AI is propelling the tech sector to a ‘1995 moment’ with a long-term growth prospect not seen since the 1990s ” said Ives. “This is an implementation story and an AI arms race as now technology providers across the software/chip/digital media ecosystem need to identify the use cases and build platforms around ChatGPT/other AI models that we believe will impact many industries for years to come will change.”

Microsoft, NVIDIA & CO.

According to Wedbush, the most important values ​​in the AI ​​race also include Microsoft and the chip manufacturer NVIDIA. But other companies are also expected to drive growth, including Google parent company Alphabet, Meta and Amazon.
However, Microsoft and NVDIA in particular have secured the lead in the race for artificial intelligence in recent weeks. Microsoft was able to set itself apart from the competition early on by integrating ChatGPT applications into its products. This was possible because Microsoft is one of the main investors in the non-profit organization OpenAI, which is responsible for the development of ChatGPT.

But NVDIA was also able to benefit from the AI ​​boom. After NVIDIA raised its revenue forecast for the coming quarter to eleven billion US dollars, beating analysts’ expectations by 50 percent, the shares experienced a sharp rise to a new record high. In a conference call with journalists, company boss Jensen Huang spoke of “incredible orders” for upgrading data centers that are to be geared more towards AI applications.

Editorial office finanzen.net

This text is for informational purposes only and does not constitute an investment recommendation. finanzen.net GmbH excludes any claims for recourse.

Image Sources: Den Rise / Shutterstock.com, PopTika / Shutterstock.com