Wedbush Securities analyst Daniel Ives predicts a seismic shift in IT spending towards artificial intelligence and related technologies. It estimates that such purchases will account for 8%-10% of IT budgets in 2024, a big jump from less than 1% in 2023.
Significant growth trajectory ahead
Major players in the technology sector, including Microsoft Corp MSFT, Salesforce Inc CRM, Palantir Technologies Inc PLTR, MongoDB Inc MDB, Oracle Corp ORCL, Snowflake Inc SNOW, Elastic NV ESTCwill experience a significant growth trajectory fueled by this wave of investment, the analyst says.
Ives identifies this phenomenon as “the initial wave of AI software growth,” heralding a transformative period for the industry. Pioneers like Jensen Huang from Nvidia Corp NVDA and Microsoft’s Satya Nadella he led the first wave of the AI revolution. Now, ripple effects are cascading across the technology landscape, offering significant opportunities to companies positioned to capitalize on this growing market.
Also read: Nvidia shares trade at 13% discount to long-term average, other AI stocks at 52% premium
Analyst ratings and price targets
Among the users highlighted by Ives, Microsoft stands out as a prime candidate for significant growth. Ives has an Outperform rating and a $500 price target on Microsoft stock. Similarly, MongoDB, with its innovative database platform, earns an Outperform rating and a $475 price target.
However, not all companies are equally willing to ride this wave. Snowflake, while maintaining a Neutral rating, maintains a $210 price target from Wedbush. The rating suggests a more cautious view of its potential to capitalize on AI-driven market expansion.
As businesses increasingly recognize the transformative potential of AI technologies, experts predict an increasing demand for advanced software solutions. Companies such as Palantir, Oracle and Elastic, each rated as outperform by Wedbush Securities, are positioning themselves to thrive in this evolving landscape.
The projected increase in AI software spending is a monumental growth catalyst for the technology sector. This could propel companies around the world toward unprecedented opportunities for innovation and expansion.
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