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The past few weeks have been a macroeconomic storm. Global stock indexes have risen and fallen wildly, and Wall Street has had very positive and very negative reactions to tech earnings reports. The stock market volatility has sparked fears of a new recession and an AI bubble. But one analyst believes that despite the market turmoil, tech earnings prove that the AI hype is here to stay.
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“Heading into earnings season in mid-July, Wall Street needed to see validating data points from the tech industry that supported the theory of an AI revolution… and importantly, demonstrated that monetization and use cases were on the horizon,” Wedbush analyst Dan Ives wrote in a note to investors on Monday.
“Despite the macroeconomic turmoil, we believe the tech sector's earnings season has been generally strong in recent weeks, confirming that the wave of AI spending is starting to wash over other parts of the tech industry,” he added.
Ives expressed confidence in Apple (AAPL) (AAPL), NVIDIA (NVDA) (NVDA), Microsoft (MSFT) (MSFT), Alphabet (GOOGL) (GOOGL), Amazon (AMZN) (AMZN), AI software companies ServiceNow (NOW) (NOW) and Palantir (PLTR) (PLTR), and AMD (AMD). Despite NVIDIA's falling stock price, Amazon's missed earnings forecast, Microsoft's disappointing AI revenue, Warren Buffett's cut in his Apple stake, and Google investors' skepticism about AI spending, Ives pointed to Apple's bullish profit outlook and Microsoft's strong revenue outlook for its AI-enabled cloud software as examples of companies building technology to the point of sustainable monetization.
“Rome wasn't built in a day and neither is this unprecedented AI revolution. In short, now is not the time to panic in tech trading as volatility returns to the markets after a rough few weeks,” Ives said. “We have our eyes on the prize – AI builds and the tech winners of this Fourth Industrial Revolution. And tech earnings season has only strengthened and confirmed our bullish view on tech stocks heading into the end of the year and 2025.”
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