Tech bulls Wedbush said in a note Thursday that they believe the AI revolution trade has gained momentum after the Federal Reserve's 50 basis point rate cut, signaling a risk-on environment for Big Tech and AI stocks.
According to Wedbush, this aggressive cut, along with a dovish dot plot into 2025, creates a "very bullish backdrop" for the tech sector.
This marks a significant shift, as many investors were waiting for this green light to engage fully with tech growth stocks heading into 2025.
Wedbush highlights that the broader technology sector has shown resilience, with recent earnings, like those from Oracle (NYSE:ORCL), affirming that the AI revolution is moving into its software and use-case phase.
Their recent observations in Asia suggest that the tech supply chain is preparing for substantial growth, driven by an estimated $1 trillion in AI capital expenditures over the coming years.
Nvidia (NASDAQ:NVDA) remains central to this revolution, with its GPUs being described as the "new oil and gold" in the IT landscape.
Wedbush estimates that for every $1 spent on Nvidia chips, there's an $8-$10 multiplier across the broader tech sector.
While NVIDIA (NVDA) leads the way, other tech stalwarts such as Microsoft (NASDAQ:MSFT), Oracle (ORCL), Palantir (NYSE:PLTR), AMD (NASDAQ:AMD), and Apple (NASDAQ:AAPL) are also joining the AI push.
The firm sees the AI boom as akin to the early days of the internet in 1995 rather than a speculative bubble like the one in 1999.
With the Federal Reserve's rate-cutting cycle now underway and tech spending on AI just beginning to ramp up, Wedbush maintains a bullish outlook for tech stocks, expecting them to continue climbing into 2025.