Wedbush Securities has forecasted a strong finish for tech stocks this year, driven by an AI revolution and a rebound in digital advertising, following a robust third-quarter earnings season in the tech sector. Analysts led by Daniel Ives highlighted that major cloud computing giants, including Microsoft (MSFT), Google (GOOGL), and Amazon (AMZN), are expected to exceed Wall Street expectations with significant growth as more workloads transition to the cloud, paving the way for extensive AI enterprise applications by 2025.
The advantage of cloud computing extends beyond these tech giants. Companies like Oracle (ORCL), SAP (SAP), IBM (IBM), ServiceNow (NOW), and Dell (DELL) are also key players in the foundational cloud domain. The accelerated deployment of AI and cloud technologies by enterprises is predicted to lay the groundwork for a secondary wave of AI-driven innovation.
With approximately 70% of global workloads predicted to move to the cloud by the end of next year, an increase from the current 50%, Wedbush anticipates a 20% rise in tech stocks by 2025. This growth is attributed to a tech bull market entering its next phase, led by revolutionary advancements and a generational consumer cycle.
Ives emphasized the significant influence of Nvidia's (NVDA) GPU chips, estimating an $8 to $10 increase in tech sector market value for every dollar spent on these chips, underscoring a bullish outlook for the sector next year. Nvidia and Microsoft are central to AI advancements, with other tech giants such as Oracle, SAP, ServiceNow, Palantir Technologies (PLTR), Salesforce (CRM), IBM, Apple (AAPL, Financial), and AMD (AMD) joining the AI push.
Additionally, Apple is gearing up for a consumer revolution with its upcoming iPhone 16, enhanced by AI capabilities. Apple's supply chain has indicated that this upgrade cycle could be historic, with over 300 million phones potentially due for upgrades after more than four years. The upcoming AI-driven enhancements are expected to boost Apple's sales to over 240 million units next year. The phased rollout of Apple Intelligence is set to coincide with a robust holiday sales season later this month.
