Wedbush analyst Daniel Ives discusses the benefits for software companies from the AI spending phase.

In recent weeks, the analyst has been tracking enterprise AI spending in 2025, focusing on use cases and identifying leading vendors. AI now makes up about 12% of many IT budgets, up from 10% in January, with some CIOs accelerating their AI strategies.

Nvidia Corp (NASDAQ:NVDA) chips and cloud providers are central to AI deployments, and for every $1 spent on Nvidia, there is an $8-$10 impact across the broader tech ecosystem.

Around 70% of companies have increased their AI budgets, signaling rapid tech spending despite economic uncertainties.

The analyst has been tracking AI adoption across industries like financial services, healthcare, transportation, and manufacturing.

Many IT departments are focusing on large-scale AI deployments with Microsoft Corp (NASDAQ:MSFT), Amazon.com Inc (NASDAQ:AMZN), and Alphabet Inc's Google (NASDAQ:GOOGL), targeting software-driven use cases.

While customers were still in the strategy phase in late 2024, there is a shift in recent weeks, with high-priority AI use cases now being rapidly implemented across various sectors in 2025. Amid the widespread buzz in the software industry about monetizing AI, a select group of companies is beginning to stand out from the crowd.

The software sector is poised for significant growth as the AI Revolution accelerates, with the adoption of generative AI and LLM models becoming key drivers.

The analyst sees Palantir Technologies Inc (NASDAQ:PLTR) and Salesforce Inc (NYSE:CRM) as top software plays amid the AI Revolution for 2025, with other vendors like Oracle Corp (NYSE:ORCL), International Business Machines Corporation (NYSE:IBM), Snowflake Inc (NYSE:SNOW), Elastic N.V. (NYSE:ESTC), MongoDB, Inc. (NASDAQ:MDB) and Pegasystems Inc. (NASDAQ:PEGA) also well-positioned.

IBM's cloud penetration has been particularly successful, presenting a major monetization opportunity. Despite investor skepticism, the analyst said the accelerating AI adoption in enterprises will benefit the software industry in 2025. The analyst also added IBM to the Wedbush Best Ideas List, reflecting higher confidence.