Wedbush: Nvidia (NVDA.US) and Microsoft (MSFT.US) Lead AI Revolution, Tech Stock Bull Market Enters New Phase

Wedbush Securities sees Nvidia (NVDA.US) and Microsoft (MSFT.US) continuing to lead the AI revolution, with new evidence suggesting the AI infrastructure market could grow 10x from now to 2027.

Dan Ives, Wedbush analyst, said: "Under the leadership of AI pioneer Jensen Huang and Nvidia, the supply chain is seeing unprecedented demand for AI chips, as AI use cases explode in the enterprise, ultimately driving a wave of corporate spending. We believe the opportunity for the entire AI infrastructure market could grow 10x from now to 2027 as the next generation of AI infrastructure is built. We estimate AI capital spending will hit $1 trillion over the next three years."

Ives said that AI-related spending is driving most of the spending in the tech supply chain, with generative AI projects regularly starting in enterprises, indicating that AI-related projects and plans will be in the "top priority" in IT budgets in 2025, which could unlock many unseen AI use cases.

Ives added: "While Nvidia and Microsoft are now the core drivers of AI, we see many other tech giants also joining the AI bandwagon, including Oracle (ORCL.US), ServiceNow (NOW.US), Palantir (PLTR.US), Salesforce (CRM.US), Dell (DELL.US), IBM (IBM.US), Apple (AAPL.US), AMD (AMD.US), etc. In short, we believe as the AI revolution leads to the next phase of the US tech stock bull market, tech stocks will rise more than 10% by the end of the year and another 20% in 2025."

Ives said that for every dollar spent on Nvidia GPUs, the entire tech industry generates a multiplier effect of 8 to 10 dollars. While Nvidia changed the global landscape with its GPUs, AMD and other companies are catching up just in time for the $1 trillion AI capital spending wave in the next few years.

Ives added: "Our survey indicates that with the explosion of use cases across the enterprise, the demand for enterprise AI is entering the next phase."