Wedbush director and senior equity research analyst Dan Ives believes a lagging group of stocks will surprise investors over the next six months.
In an interview with Bloomberg Television, Ives says say that while many investors have taken their eyes off the Magnificent 7 due to their massive AI spend, he believes the hyperscalers are poised to return as market leaders.
“Look, those are the hyperscalers [spending] $700 billion. I mean, that’s what’s funding the AI revolution. I mean, if you throw away memory chips, NVIDIA and everything else, but that’s just the first phase.
Because what the hyperscalers do is: this is the expansion. It’s the Vegas Strip building in 1955. But ultimately the monetization will come now. I mean, if you look at Meta, they’re not just spending for the sake of spending. Look at Microsoft, they actually own the company. Alphabet: 5% of their customers have taken the AI path. [It’s the] The same goes for Amazon.”
According to Ives, the upcoming earnings season will prove Mag 7 skeptics wrong.
“So my whole point is, you’ve had a technical rally, but now the Mag 7 [is in the] penalty box, essentially. I think it performs significantly better [in the] second half of the year. And I think there’s going to be a huge validation moment for Big Tech in earnings season, as you see in July.”
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