Wedbush: Microsoft and other three major cloud giants have strong AI demand, and the third-quarter tech earnings reports will exceed expectations
Investment bank Wedbush Securities pointed out that the demand for artificial intelligence and cloud computing services from Microsoft, Alphabet, and Amazon is strong, and the technology earnings reports for the third quarter are expected to exceed expectations. Analysts believe that Wall Street has underestimated the scale of AI spending, which is expected to reach approximately $3 trillion over the next three years, and technology stocks may rise by more than 7% before the end of the year. The collaboration between OpenAI and NVIDIA and AMD further demonstrates the growth in enterprise demand
According to the Zhitong Finance APP, investment bank Wedbush Securities stated that Microsoft (MSFT.US), Alphabet (GOOGL.US), and Amazon (AMZN.US) are experiencing "very strong" enterprise demand for their artificial intelligence and cloud computing services.
The analysts led by Dan Ives noted in a report to clients: "Based on field research, the AI enterprise demand for cloud computing giants Microsoft, Alphabet, and Amazon is very robust this quarter. We believe that tech stocks will see a strong third-quarter earnings season led by large tech companies. Although some investors remain skeptical about valuations and the growth rate of tech spending, we believe Wall Street has underestimated the scale of AI spending trajectories. We expect third-quarter tech earnings to once again validate this trend, with initial capital expenditure forecast data before 2026 likely to double."
Accordingly, the firm predicts that AI technology and related application spending by enterprises and government departments will reach approximately $3 trillion over the next three years. The report also anticipates that tech stocks could rise by more than 7% by the end of the year, with quarterly performance indicating to investors that the AI spending wave is still in its early stages. OpenAI's recent collaborations with NVIDIA and AMD are the best examples of this.
The analysts added: "We believe that OpenAI's latest investments in NVIDIA and AMD confirm the capacity expansion and demand-driven changes occurring on the enterprise side, which will bring about the second, third, and even fourth waves of derivative opportunities for the AI revolution. The tech winners on our IVES AI 30 list are validating this trend."
Microsoft, Amazon, and Alphabet are all set to release their quarterly earnings reports in the coming weeks
