The global AI boom is still in its early stages, similar to the development of the Internet in the 1990s. It can be compared to the "1996 moment" of the Internet boom, indicating that the AI boom is still in its very early stages. The bank states that the impact of AI will be perceived faster than previous technological booms. Regarding NVIDIA (NVDA.US), which has been dubbed the "most important stock on Earth" and the "global AI leader," Bank of America suggests that the relatively low levels after a wave of sell-offs are "good buying opportunities," and continues to list NVIDIA as the "preferred stock" in their semiconductor sector.

Recently, there have been increasing doubts in the market about the AI boom, with many skeptical about the high-profit potential and bleak profit prospects of AI technology. However, Bank of America's team of analysts emphasizes that the AI boom is still in its very early stages and closely follows the development trajectory of Internet technology in the 1990s.

As more skeptics emerge regarding AI, they are eager to see companies achieve the promised increase in efficiency, productivity, and most importantly, profits through this technology.

The latest report from Bank of America states, "Doubters argue that the revenue potential of generative AI does not prove the rationality of massive investments in current AI infrastructure. However, it is important to remember that, unlike the initial consumer use cases of the Internet, there have been thousands of breakthrough use cases and Internet companies that have emerged due to Internet technology."

The bank states that this report, released on Thursday, draws on consultations and survey data from over 3,000 stock analysts and macro strategy specialists from various professional institutions.

These analysts and strategists generally agree that AI is the third major technological cycle of the past 50 years, starting with the debut of ChatGPT in November 2022. The trajectory of AI development follows the personal computing boom in 1981 and the Internet innovation wave that started in 1994. The explosive expansion of the Internet began in 1996.

Bank of America's report states that unlike the technology boom cycles that take 15-30 years to become mainstream, the impact of artificial intelligence may unfold at a much faster pace. The report states, "Generative artificial intelligence may catalyze a new technological revolution, disrupting all industries and changing the global economy within the next 5 to 10 years."

However, the report also states that investors may underestimate the long-term impact of this technology while overestimating its short-term potential, but this is also a typical characteristic of technological booms. "It is expected that in the coming years, capital expenditure related to artificial intelligence may exceed $1 trillion, but compared to the internet era, the development of artificial intelligence is just getting started," the Bank of America report adds.

Enterprises worldwide are rushing to layout the AI field, which is an unstoppable trend.

Bank of America's team of analysts said that current investments in top AI companies such as OpenAI, Anthropic, and Inflection AI are only a prerequisite for creating breakthrough generative AI applications, which are still largely in the testing phase and require longer-term development of iterative large-scale models and some core technological elements.

Some strategists predict that artificial intelligence will drive accelerated profit expansion for most industry groups, with the semiconductor and software industries expected to achieve the most significant gains. It is widely expected that profit margins will expand by approximately 4.8% and 5.2% respectively over the next five years.

At the time of the report's release, skepticism about artificial intelligence technology has been growing, as some investors insist that they have not seen any meaningful return on investment from technology giants' substantial infrastructure investments in this technology. This is also the negative catalyst for the recent sharp decline in NVIDIA's stock price, resulting in a market capitalization loss of approximately $400 billion in the past week.

However, from Bank of America's latest report, as well as the latest report from IDC, we can see that the current development of AI technology is still at a very early stage, and the AI infrastructure construction dominated by AI GPU demand is just beginning. Therefore, companies like NVIDIA are among the earliest beneficiaries of the AI boom, and the long-term prospects for profit creation in AI software and other application sectors are still very optimistic, which is one of the core reasons behind Bank of American's continued bullishness on NVIDIA's stock price.

According to the latest forecast from renowned research firm IDC's Global AI and Generative AI Spending Guide, the organization predicts that global AI-related spending (with a focus on AI-supported applications, AI chips, AI infrastructure, and related IT and business services) will at least double from the current level by 2028, reaching around $632 billion. IDC predicts that AI, especially generative AI (GenAI) rapidly integrating into various terminal devices and products, will achieve a compound annual growth rate (CAGR) of 29.0% in AI spending during the forecast period of 2024-2028.

IDC pointed out that software or applications will be the largest category of AI technology expenditure, accounting for more than half of the entire AI market in most forecasts. IDC predicts that the five-year compound annual growth rate of AI software will reach 33.9% during the period from 2024 to 2028. IDC forecasts that spending on AI-related hardware, including servers, storage devices, and infrastructure-as-a-service, will become the second largest category of technology expenditure.

A research report released by global bank UBS shows that the global technology industry is just starting a large-scale growth cycle. UBS predicts that by 2027, AI technology will have a very wide range of applications in various industries in major economies around the world, making AI big models and AI software applications a subdivided market worth up to $225 billion, compared to only $2.2 billion in 2022. The compound annual growth rate during this period is expected to be as high as 152%. UBS also predicts that the total revenue of the AI industry will increase 15 times, from approximately $28 billion in 2022 to $420 billion in 2027.

In the long run, the AI boom may be the core catalyst for a bull market in the stock market.

On Wall Street, the sentiment of "buying on the dips" is particularly strong. The bullish investors on Wall Street firmly believe that this round of correction has squeezed out most of the "AI bubble," and tech companies that can continue to profit in the AI wave are expected to enter a new round of "major upswing," such as NVIDIA, AMD, Taiwan Semiconductor, Advanced Micro Devices, and Broadcom, among other popular chip stocks. The core infrastructure for popular generative AI tools such as ChatGPT is indispensable for chips, and these popular chip stocks can be called the biggest winners of the AI boom, especially the combination of the "CUDA ecosystem + high-performance AI GPU," which forms NVIDIA's exceptionally strong moat.

Global asset management giants, such as BlackRock Inc., the world's largest asset management firm, and BNP Paribas Asset Management, a European asset management giant, as well as fund managers and market strategists, have expressed that the unprecedented investment frenzy in global stock markets centered around artificial intelligence is far from over. After a brief adjustment, the stock prices of AI leaders like Nvidia, which have repeatedly reached new highs, will continue to drive a "long bull trend" in global stock markets, continuously reaching historic highs.

Economists from Capital Economics even predict that the optimistic sentiment surrounding the development of AI technology will drive additional multiple expansions, pushing the benchmark index of the U.S. stock market, the S&P 500 index, to reach a historical peak of 7,000 points by 2025.

Evercore ISI, which has been bearish on the U.S. stock market in the long term, recently reversed its position and turned bullish on the U.S. stock market. Julian Emanuel, the firm's chief stock and quantitative strategist, has significantly raised the firm's year-end forecast for the S&P 500 index to 6,000 points.

Evercore ISI emphasized that the retreat of inflation and the AI boom led by tech giants will further boost the US stock market. "Nowadays, the potential of AI is changing in every job and industry. Slowing inflation, the Federal Reserve's intention to cut interest rates this year, and the resilient economic background support the 'golden girl' economy."

Analysts from Goldman Sachs, Bank of America, and Morgan Stanley are very optimistic about the trend of NVIDIA's stock price. They generally believe that global companies still have strong demand for NVIDIA's H100/H200 AI GPUs, and the next generation AI GPU based on the Blackwell architecture is expected to bring greater revenue contributions. The combination of the "CUDA software and hardware synergy platform + high-performance AI GPU" forms NVIDIA's powerful moat. These major banks are all calling it a great opportunity to "buy on the dip".

Among them, the Bank of America analyst team recently reiterated a "buy" rating on NVIDIA, calling it the "best industry choice". They believe that the decline in NVIDIA's stock price provides a good entry point, and they have raised the target price for NVIDIA from $150 to $165, compared to NVIDIA's Thursday close of $119.140. The Bank of America analyst emphasized that the market's skepticism about the potential of AI is unnecessary at least until 2026.