Wedbush Securities stated that this sell-off in technology stocks presents a buying opportunity after investors in the tech sector endured "yet another very difficult and brutal trading day."
Wedbush, the investment bank, stated that this sell-off in technology stocks presents a buying opportunity after investors in the tech sector endured "yet another extremely difficult and brutal trading day."
Led by Daniel Ives, the analysts noted, "Yesterday was another very tough and brutal day for tech investors as $Tesla (TSLA.US)$ 、 $Microsoft (MSFT.US)$ 、 $Palantir (PLTR.US)$ 、 $NVIDIA (NVDA.US)$ The risk-averse rally experienced by leading AI technology companies has introduced some short-term concerns into this tech bull market.
The analysts added that tech stocks entered a "heart-stopping moment" after Palantir reported surprisingly strong growth data far exceeding Wall Street expectations at the start of earnings season a few weeks ago, only to face a sharp selloff the following day.
Ives and his team remarked: "This has heightened concerns around the 'AI bubble theory' driven by short sellers, worries about NVIDIA’s revenue from China being cut off, and discussions on whether OpenAI is 'too big to fail'… Adding fuel to the fire were Michael Burry's bearish tweets. In short, we believe this represents merely a brief and minor panic moment for tech stocks because we are confident that as investors seek to participate in the AI revolution and the second-, third-, and fourth-order derivative effects currently unfolding on both consumer and enterprise levels, tech stocks will experience significant gains for the remainder of the year."
Analysts pointed out that the most important takeaway from the third-quarter earnings season for tech stocks was the robust cloud business data reported by Microsoft, Amazon, and $Alphabet-A (GOOGL.US)$ , as well as the significant capital expenditure growth projected through 2026, led by platform companies and other tech giants. $Meta Platforms (META.US)$ Analysts believe that as AI-related trading enters its next phase, the capital expenditures of tech giants could increase from approximately USD 380 billion this year to between USD 550 billion and USD 600 billion by 2026.
Ives and his team stated: "This is an AI arms race, with spending by tech giants driving the next phase of growth. This trend shows no signs of slowing down through 2026, and Cisco's optimistic quarterly results and guidance released this week serve as another positive data point… We view this as a massive validation and bullish factor supporting the AI revolution thesis."
The analysts believe that NVIDIA's upcoming earnings report next week will serve as another critical validation point for the AI revolution and act as a positive catalyst for tech stocks through the end of the year, as investors continue to underestimate the scale and scope of AI-related spending.
Editor/KOKO
