In a recent appearance on CNBC’s ‘Squawk on the Street,’ Dan Ives, the global head of technology research at Wedbush Securities, shared his bullish outlook on technology stocks heading into 2025, driven by what he describes as the ongoing AI revolution. Ives, a frequent guest on CNBC throughout 2024, reiterated his confidence in the sector, predicting a 25% increase in tech stocks in the new year. He pointed to key players like Nvidia (NVDA), Microsoft (MSFT), Tesla (TSLA), and Palantir (PLTR) as his top picks, emphasizing that we are still in the early stages of AI’s impact on technology.
Ives likened the current phase of AI development to being in the “second inning” of a nine-inning game, suggesting that there’s significant growth yet to unfold. He highlighted the multiplier effect of AI spending, explaining that for every dollar invested in AI chips, there’s an $8 to $10 return across the tech sector, illustrating the profound economic impact of AI adoption.
The conversation also touched on investor expectations for tangible returns from the massive investments in AI by tech giants. Ives believes we’re at an inflection point where companies like Palantir and Salesforce (CRM) are demonstrating real-world applications of AI, signaling that the sector is beginning to justify its investment. He mentioned an increase in AI use cases within enterprises, with deployment rates growing fivefold in the last six months, underscoring software’s pivotal role in this transformation.
When asked about skepticism regarding certain software companies’ AI potential, Ives named Adobe (ADBE) as one where he sees less immediate impact from AI, although still acknowledging its potential. He contrasted this with his confidence in companies like Palantir, Salesforce, MongoDB (MDB), Snowflake (SNOW), and Oracle (ORCL), which he believes are at the forefront of AI integration into their business models. He also predicted a surge in mergers and acquisitions in tech, suggesting that with less regulatory scrutiny, major tech players would grow even stronger.
Regarding concerns about Palantir’s high valuation—50 times sales—and insider selling, Ives advocated for a long-term view, arguing that if Palantir can emulate the growth path of companies like Oracle or Salesforce, its current metrics could be justified. “I think this is a stock that has potential to be 3 digits and higher,” he stated, dismissing short-term noise and emphasizing the company’s ability to expand its AI platform (AIP) and increase its revenue share from AI solutions.
Ives’s discussion on CNBC paints a picture of a tech sector on the cusp of a significant growth phase, fueled by AI’s transformative potential. His insights provide a roadmap for investors looking to navigate the complexities of technology investments in the coming year, emphasizing execution, innovation, and strategic acquisitions as key drivers of success.
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