Wall Street veteran Dan Ives is urging investors to look past the current fears that artificial intelligence could upend the enterprise software and cybersecurity sectors, describing the “AI doomsday” narrative as largely overblown.
“The AI trade has been the ‘fear of the unknown’ for the tech and software sector in particular,” Wedbush’s Ives wrote in a recent commentary. “For the bulls, it’s like fighting a ghost in a dark closet, as the numbers today cannot prove monetization yet for tech players while the cap-ex dollars approach $700 billion this year alone.”
Ives compared the current AI anxiety to past tech fears that ultimately proved exaggerated. He cited examples including Microsoft’s mid-2000s move into cybersecurity and Intel’s dominance in the chip market a decade ago, noting that smaller players like Nvidia eventually emerged as key innovators. “The rest is history with the Godfather of AI Jensen and Nvidia now the one chip fueling the AI Revolution and Intel playing major catchup,” he said.
The key, according to Ives, is that enterprise software, cybersecurity, and IT infrastructure remain indispensable in the AI era. He argued that the idea AI could allow companies to slash IT budgets by 70% is unrealistic. “The stacks of data, processes, security, organizational structure, IT architecture, and vital role of the software layers have become the hearts and lungs of modern enterprises,” he wrote.
Looking ahead, Ives sees a wave of AI-driven spending shaping the sector over the next 12 to 18 months. “Software, cyber security, and IT infrastructure will be key pillars of the future of the AI Revolution…this will be a software-led tidal wave of spending given the timing of many of these use cases and AI deployments,” he said.
Ives highlighted Palo Alto Networks’ recent CyberArk deal as an example of companies positioned to capitalize on the growing AI cyber market, warning that many investors may miss the narrative. “The future AI tech winners are being built while many investors will miss this narrative like other ones over the decades in tech,” he concluded.