Wedbush managing director and senior equity research analyst Dan Ives believes one lagging group of stocks will surprise investors in the next six months.
In an interview with Bloomberg Television, Ives says that while many investors have taken their eyes off the Magnificent 7 due to their massive AI spending, he believes that the hyperscalers are poised to return as market leaders.
“Look, the hyperscalers are [spending] $700 billion. I mean, that’s what’s funding the AI revolution. I mean, when you throw out memory chips, NVIDIA, everything else, but that’s just the first phase.
Because what the hyperscalers are doing is: this is the build-out. It’s Vegas Strip building in 1955. But ultimately, the monetization now is going to come. I mean, when you look at Meta, they’re not just spending to spend. You look at Microsoft, they essentially own the enterprise. Alphabet: 5% of their customers have gone to the AI path. [It’s the] same thing with Amazon.”
According to Ives, the incoming earnings season will prove Mag 7 skeptics wrong.
“So my whole point is, you’ve had this tech rally, but the Mag 7 right now [is in the] penalty box, essentially. I think it significantly outperforms [in the] second half of the year. And I think earnings season, as you see in July, there’s going to be a huge validation moment for Big Tech.”
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