Fears of an artificial intelligence (AI) bubble may be overstated, according to tech bull Dan Ives, who argues that the sector’s long-term growth prospects remain intact.
Speaking to CNBC’s Squawk Box Europe on Friday, the Wedbush Securities managing director said that while market pullbacks are inevitable, they represent opportunities rather than warning signs of collapse.
“My view is, you’re going to have these digestion periods, but you cannot get too nervous,” Ives said.
Market bears are “going to come out of hibernation mode every time there’s some volatility. I view those more as golden opportunities to own the tech winners.”
Ives, a long-time optimist on technology stocks, likened the AI investment cycle to a party that has only just begun.
“The AI party started at 9pm. It’s now 10pm. That party goes to 4am,” he remarked.
In his view, the ongoing AI boom could add another 20% to 25% to tech stocks over the next 12 months.
Big tech positioned as clear winners
Among the companies best placed to capitalize on the AI wave, Ives highlighted major technology firms including Microsoft, Amazon, Google, Nvidia, Tesla and Meta.
The so-called “hyperscaler” cloud providers — Microsoft, Amazon and Google — are benefiting from surging demand for data centers, which are critical to training and operating AI systems.
“These are wartime CEOs across the board,” Ives said, noting that while execution risks remain, the scale and resources of these firms give them an advantage in building out AI infrastructure and services.
Nvidia has already emerged as a dominant player in the market for graphics processing units (GPUs), the hardware required to train large language models.
Tesla, meanwhile, is betting heavily on autonomous vehicles and robotics, with ambitions to launch robotaxi services powered by AI rather than human drivers.
Meta also stands out, though Ives noted that the company faces the challenge of proving it can translate its massive user base into meaningful AI-driven revenue.
Chief Executive Mark Zuckerberg has recently formed a team dedicated to developing AI that could surpass human intelligence, underlining the firm’s strategic pivot.
Software firms enter “Renaissance Growth”
Beyond Big Tech, Ives sees select software companies as poised for significant upside.
He named Palantir, Snowflake, and Salesforce as firms likely to experience what he described as “renaissance growth” in response to rising enterprise demand for AI services.
These companies are positioned to integrate AI capabilities into data analytics and enterprise solutions, enabling them to capture a growing share of corporate spending on artificial intelligence.
Legacy players at risk
On the other side of the equation, Ives warned that some established firms are in danger of being left behind.
He pointed to Adobe and Intel as examples of companies struggling to adapt to the rapid pace of AI development.
Adobe, he argued, has been slow to pivot its business model in response to AI disruption.
“AI is potentially eating away its business model,” Ives said, urging the company to pursue aggressive acquisitions and strategic changes to avoid falling behind.
Intel, meanwhile, has lost ground to rivals such as Nvidia and AMD in the semiconductor space.
Ives criticized the chipmaker’s management approach, likening it to a “government agency with so much red tape.” He added that Intel had “massively miscalculated the competitive environment over the last decade,” allowing competitors to pull ahead on innovation.
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