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The last couple of weeks have been a macroeconomic whirlwind: global stock indices have hit major ups and downs and Wall Street had both very positive and very negative reactions to tech companies’ earnings reports. Stock market volatility sparked renewed recession and AI bubble fears. But one analyst think that, despite the market turbulence, tech earnings proved the AI hype is here to stay.
“Heading into earnings season in mid July the Street needed to see validation data points from the tech world supporting this AI Revolution thesis... and importantly show monetization and use cases are on the doorstep,” wrote Wedbush analyst Dan Ives in a note to investors Sunday.
“Despite all the macro noise… the last few weeks overall tech earnings season was generally robust and we believe solidifies the AI tidal wave of spending is coming to the shores of the rest of the tech world,” he added.
Ives signaled faith in Apple AAPL+0.29%, Nvidia NVDA-5.05%, Microsoft MSFT-0.80% , Alphabet GOOGL+0.33%, Amazon AMZN-0.33%, AI software firms ServiceNow NOW-2.01% and Palantir PLTR-0.35%, and AMD. That’s despite Nvidia’s stock market sink, Amazon’s earnings miss, Microsoft’s AI sales disappointment, Warren Buffett’s reduced Apple stake, and Google investors’ skepticism of its AI expenditures. Ives pointed to Apple’s bullish earnings outlook and Microsoft’s positive sales outlook for its AI-powered Cloud software as examples of companies building out the tech to the point of sustainable monetization.
“Rome was not built in a day and neither will this unprecedented AI Revolution. In a nutshell... This is not the time to panic on the tech trade as volatility has returned to the market after a wild few weeks,” Ives said. “We focus with eyes on the prize: the AI buildout and the tech winners of this 4th Industrial Revolution... and tech earnings season has only bolstered and validated this bullish view of tech stocks heading into year-end and 2025.”