Wedbush analysts anticipate a robust tech earnings season for the third quarter, citing solid enterprise spending and a resurgence in digital advertising. They believe that the ongoing “AI revolution” will continue to push tech stocks upward through the end of the year.
The firm highlights that the central theme for this earnings season will be the next phase of AI innovation. Cloud giants like Microsoft (MSFT), Google (GOOGL), and Amazon (AMZN) are expected to outperform market expectations, as more businesses transition their workloads to the cloud. This shift is setting the stage for widespread deployment of AI-driven enterprise models by 2025.
Wedbush also notes that the strength in cloud computing extends beyond the major players. Companies such as Oracle (ORCL), SAP (SAP), IBM (IBM), ServiceNow (NOW), and Dell (DELL) are identified as key cloud stock players likely to benefit from the increased adoption of AI and cloud technologies. The firm describes this trend as the “second phase” of the AI revolution.
According to Wedbush, they foresee a significant shift, predicting that 70% of global workloads will be cloud-based by the end of 2025, compared to less than 50% today.
In general, the analysts maintain a positive outlook on tech stocks, forecasting a 20% rise in 2025. They also anticipate a favorable macroeconomic environment as the Federal Reserve, under Jerome Powell, begins cutting interest rates, which could lead to a soft landing for the broader economy. AI spending, they say, represents a long-term investment trend that will increasingly influence the tech sector.
The firm also emphasizes the ripple effect of AI investment. For example, every $1 spent on Nvidia’s (NVDA) GPU chips is expected to generate an $8-$10 impact across the tech ecosystem, further supporting the bullish outlook on the industry.
While Nvidia and Microsoft are positioned as major forces driving AI development, Wedbush also points to the growing involvement of other tech companies, including Oracle, SAP, ServiceNow, Palantir (PLTR), Salesforce (CRM), Dell, IBM, Apple (AAPL), and AMD (AMD), among others.
