Wedbush analysts on Friday commented on yesterday’s selloff in tech stocks, which were under pressure by factors such as "AI Bubble" talk along with worries about Nvidia China revenues being shut off.
“In a nutshell, we view this as a short lived mini panic moment for tech stocks as we believe tech stocks will have a major rally into the rest of the year as investors look to play the AI Revolution and the 2nd/3rd/4th derivatives now playing out across consumer and enterprise names,” the analysts wrote in a note to clients.
They believe the current tech capital expenditure Supercycle, boosted by AI, is driving trillions of spending over the next few years, which the analysts expect will keep the tech bull market alive for at least another two years.
The Wedbush equity research team estimates Big Tech's capital expenditures could reach $550 billion to $600 billion in 2026, up from about $380 billion this year, as the next stage of the AI trade takes hold.
The analysts also view Nvidia's earnings next week as being “another major validation moment for the AI Revolution” and a positive catalyst for tech stocks into year-end as investors continue to underestimate the scale and scope of AI spending.