Dan Ives, Global Head of Technology Research at Wedbush Securities, says investors are underestimating the “scale and scope” of the current technology bull market.
Speaking in an interview with Bloomberg Television, he points to what he describes as a multi-year capital expenditure supercycle driven by artificial intelligence.
Ives says he expects the tech bull market to continue for at least two more years supported by strong spending on infrastructure and chip demand across global markets.
Ives says,
“The average tech company in the 1990s traded at 30 times revenues… now the average tech company trades at 27 times earnings.”
Ives notes that large-cap technology firms collectively hold about $1 trillion in cash on their balance sheets and generate $300 to $400 billion in free cash flow each year. He projects capital expenditures across the sector to reach $500 to $600 billion in the next fiscal year.
He says demand for AI-related components, particularly video chips, continues to outpace supply, with demand ratios as high as 12-to-1 or 15-to-1 in Asia. Ives adds that many investors remain focused on short-term earnings and revenue trends while the broader impact of AI and automation will take longer to unfold.
Citing Meta Platforms as an example, Ives says the company’s decision to increase capital expenditures despite near-term pressure on earnings reflects a strategic focus on future growth. He describes CEO Mark Zuckerberg as a “wartime CEO” prioritizing investments that are expected to pay off over several years.
He also points to Palantir Technologies, saying the firm could reach a $1 trillion market capitalization within the next two to three years as it expands its AI capabilities.
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