Key Points
- Wedbush forecasts a strong Q3 earnings season for tech, driven by AI and cloud expansion.
- Microsoft, Google, and Amazon are expected to exceed growth expectations as AI workloads increase.
- By 2025, 70% of global workloads are expected to be on the cloud, and Wedbush predicts a 20% rise in tech stocks.
- Nvidia’s AI chips are central to this revolution, generating an $8-$10 multiplier for each $1 across the tech sector.
Wedbush analysts are forecasting a robust third-quarter earnings season for the tech sector, fueled by strong enterprise spending and a recovery in digital advertising. The firm believes the ongoing “AI revolution” will propel tech stocks higher through the remainder of the year and into 2025.
According to Wedbush, the key theme for this earnings season will be the next phase of AI growth. Major cloud providers such as Microsoft (NASDAQ: MSFT), Google (NASDAQ: GOOGL), and Amazon (NASDAQ: AMZN) are expected to exceed Wall Street’s growth expectations. These companies are seeing increased workloads moving to the cloud, enabling numerous AI enterprise applications to be deployed by 2025.
Wedbush’s outlook extends beyond just the tech giants. Companies like Oracle (NYSE: ORCL), SAP SE ADR (NYSE: SAP), IBM (NYSE: IBM), ServiceNow (NYSE: NOW), and Dell (NYSE: DELL) are also expected to experience growth. Wedbush labels these firms as “foundational cloud stock players” that will benefit from accelerating AI and cloud adoption among enterprises. This broader trend is described as the “second derivative” of the AI revolution, which will continue to reshape the tech landscape.
The analysts forecast that 70% of global workloads will be on the cloud by the end of 2025, a significant increase from today’s less than 50%. This shift in cloud usage is seen as a cornerstone of future tech investment, as enterprises across industries increasingly rely on AI-powered cloud infrastructure for innovation and operational efficiency.
Wedbush maintains a bullish outlook on tech stocks, projecting a 20% rise in 2025. They also predict a macroeconomic “soft landing” as the Federal Reserve, led by Jerome Powell, embarks on an aggressive rate-cutting cycle. This stable economic environment is expected to support continued tech investment, particularly in AI technologies.
Nvidia (NASDAQ: NVDA) is highlighted as a pivotal player in the AI revolution. Analysts estimate that each $1 spent on Nvidia’s GPU chips generates an $8 to $10 multiplier across the tech ecosystem. This underscores Nvidia’s central role in driving AI innovation.
Beyond Nvidia and Microsoft, Wedbush highlights the growing involvement of other tech leaders such as Oracle, SAP, ServiceNow, Palantir (NYSE: PLTR), Salesforce (NYSE: CRM), Dell, IBM, Apple (NASDAQ: AAPL), and AMD (NASDAQ: AMD). These companies are expected to play crucial roles as AI adoption accelerates across various industries.
