Wedbush argued that the current “AI threat” trade against software and cybersecurity was misplaced and compared it to previous disconnected technology fears that failed to play out.
The broker reiterated 'outperform' ratings across its core large-cap artificial intelligence beneficiaries, including Advanced Micro Devices Inc (NASDAQ:AMD, XETRA:AMD) with a $290 price target, Amazon.com Inc (NASDAQ:AMZN) with a $300 price target, Microsoft Corp (NASDAQ:MSFT) with a $575 price target, Nvidia Corp (NASDAQ:NVDA, XETRA:NVD) with a $230 price target, and Palo Alto Networks Inc (NYSE:PANW, XETRA:5AP) with a $225 price target.
Dan Ives and colleagues said investor concern centred on the idea that artificial intelligence models from groups such as Anthropic and OpenAI would materially reduce enterprise software and cybersecurity spending.
The bear case assumed that enterprises could cut up to 70% of information technology budgets by replacing traditional software stacks with lower-cost artificial intelligence tools.
Wedbush described this thesis as fictional and argued that the complexity of modern enterprises made wholesale replacement of software layers “nearly impossible”.
The analysts highlighted the depth of enterprise data stacks, security requirements, regulatory constraints, and embedded processes, which, in their view, entrenched software, cybersecurity, and infrastructure as structural components of the artificial intelligence era rather than casualties of it.
They acknowledged that current financial results did not yet demonstrate material monetisation from artificial intelligence agents and platforms.
However, Wedbush expected a “software-led tidal wave” of artificial intelligence-driven spending to emerge over the next 12 to 18 months as enterprise deployments moved from experimentation to scaled rollouts.
The note framed the current scepticism as a classic “fear of the unknown” phase, with capital expenditure across hyperscalers approaching $700bn this year, while revenue benefits remained early stage.
Wedbush drew parallels with earlier market narratives, including concerns that Microsoft’s entry into cyber security would undermine the sector, or that cloud computing would erode incumbent software economics, both of which ultimately proved unfounded.
The broker cited Palo Alto Networks’ proposed CyberArk acquisition as an example of positioning to monetise artificial intelligence-driven expansion of the cybersecurity total addressable market over the next 12 to 18 months, despite near-term investor focus on execution.
Wedbush concluded that the long-term artificial intelligence winners were being built during the current period of doubt, and that investors risked missing the next leg of the technology bull cycle by focusing on near-term monetisation gaps rather than the forward spending path.