According to Wedbush, the artificial intelligence “gold rush” could cost tech companies billions of dollars, potentially launching a significant tech stock rally into the second half of this year.
In a note released on Monday, analysts stated that the company anticipates that tech companies will significantly increase their spending on AI projects over the course of the following year, with AI spending potentially reaching $800 billion across the sector.
According to the memo, instead of the 1% that was anticipated in 2023, individual organizations may grow their AI budgets to 8–10% of their whole IT budget in 2024. This is due to competitors like Google and Microsoft spending more on cloud services recently.
In the midst of the hype surrounding ChatGPT, that forthcoming AI “spending wave” may create the conditions for yet another significant rally in tech stocks, adding to the sector’s stellar performance this year.
Analysts said, “We see tech stocks heating up in the second half.” They estimated that the industry could rise by 12 to 15 percent as businesses scramble to invest in generative AI. Based on our recent research in the field, we consider this to be a “1995 Internet Moment”—not a “1999 Dot.” The second, third, and fourth derivatives of this AI Gold Rush are just beginning to evolve for the technology landscape. “Blowup Moment,” the note continued.
Wedbush stated that Microsoft, which expanded its partnership with ChatGPT creator OpenAI in January, may be one of the leading names in the industry. The stock may be poised to gain 35%-40% over the course of the following few years. Nvidia, Google, Oracle, Meta, Amazon, and Salesforce are just a few of the major companies taking part in the AI movement.
“While bears keep on worrying about tech valuations and the dubious full scale setting we accept this at last is the beginning of another tech positively trending market we see heading into 2024 being driven by this man-made intelligence upheaval combined with a balancing out IT spending climate,” Wedbush investigators said.
Wall Street’s enthusiasm for AI has been questioned by other experts, and some commentators have argued that companies experimenting with the technology are seeing their shares become overpriced. Bank of America suggested that the AI stock boom might be beginning to deflate as investors sell tech shares, describing it as a “baby bubble.”