'AI Revolution' Key Narrative For Q4 Tech Earnings, Says Analyst, As He Flags A 'Glaring Positive' That Can Mitigate Bears' Valuation Concerns
Portfolio Pulse from Shanthi Rexaline
Wedbush analyst Daniel Ives anticipates a positive tech earnings season for Q4, highlighting the 'AI Revolution' as a key narrative. He notes increased demand in enterprise software, cybersecurity, and AI projects, with Microsoft and Nvidia leading the AI charge. Ives mentions potential revenue growth for Microsoft from AI and sees Google, Datadog, and Palantir as beneficiaries of the AI trend. He also lists his favorite tech stocks for 2024, including Apple, Microsoft, Google, and several cybersecurity firms. The Technology Select Sector SPDR Fund (XLK) was down in premarket trading.
January 17, 2024 | 2:21 pm
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POSITIVE IMPACT
Microsoft is expected to see significant revenue growth from AI, particularly from Co-Pilot deployments, which could add $25 billion by 2025.
The analyst's positive outlook on Microsoft's AI projects and expected revenue growth from Co-Pilot deployments suggest a bullish sentiment for MSFT in the short term.
CONFIDENCE 80
IMPORTANCE 85
RELEVANCE 90
POSITIVE IMPACT
Nvidia is highlighted as a leader in the AI space, with the analyst noting it as the 'only game in town' for AI chip/GPU demand until competitors catch up in 2025/2026.
Nvidia's current position as the primary supplier for AI chips/GPUs suggests a positive short-term impact on its stock, especially with the anticipated AI spending wave.
CONFIDENCE 75
IMPORTANCE 80
RELEVANCE 85
NEGATIVE IMPACT
The Technology Select Sector SPDR Fund, which includes major tech companies, was down 0.77% in premarket trading, potentially reflecting broader tech sector sentiment.
The premarket trading dip in XLK may suggest short-term negative sentiment, but the overall positive outlook for tech earnings could mitigate this impact.
CONFIDENCE 70
IMPORTANCE 60
RELEVANCE 70