The artificial intelligence (AI) revolution is playing out, according to analysts at Wedbush, who believe there is a "tidal wave" of spending coming to the tech industry.
Analysts explained in a note to clients that heading into 2024, there was building hype and excitement for AI, which Wedbush views as the "biggest tech transformation since the start of the Internet."
"Tech earnings season so far has delivered in Kelce-like fashion as the jaw dropping monetization and Copilot success seen at Redmond is the tip of the spear for AI across the broader tech industry as we predict $1 trillion of incremental tech spending over the next decade," analysts wrote.
"While AI starts with the Godfather of AI Jensen and Nvidia (NASDAQ:NVDA) as the only game in town from an AI chip perspective (AMD (NASDAQ:AMD) joining the party soon), it's all about the 2nd, 3rd, and 4th derivative of this AI Revolution," they added.
Analysts argue that Street numbers (and valuations) for 2024 and 2025 will move higher as this AI spending tidal wave hits the tech industry.
"It's all about the use cases exploding, which is driving this tech transformation being led by software and chips into 2024 and beyond and thus speaks to our tech bull thesis for 2024/2025," they stated.
Wedbush highlighted Pegasystems (NASDAQ:PEGA), Salesforce (NYSE:CRM), and others as names not being given credit for incremental AI growth. Meanwhile, the firm's favorite tech names still include giants such as Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT), and Alphabet (NASDAQ:GOOGL).