GLTALongs. 11:23 AM EDT, 06/14/2023 (MT Newswires) -- Nvidia (NVDA) and Microsoft (MSFT) stand to benefit as the tech sector is on the cusp of its next growth cycle backed by the artificial intelligence "revolution," Wedbush said in a note to clients on Wednesday.
The analysts said that as the US Federal Reserve seems to be coming to the end of its rate hike cycle and inflation appears to be cooling, the strong year for tech stocks will continue.
"While its been a strong year for the tech sector we believe a broader rally around software, chips, and Big Tech could be on the horizon as we expect the tech sector to be up another 10%-12% in 2H," the note said, adding that AI is the "most transformational technology we have seen since the Internet started to take shape."
The analysts said that Nvidia's recent outlook and Wedbush's channel checks give further confidence for an AI bullish sector call that began in January.
"With Microsoft a clear market leader in the AI race along with Nvidia, this battle will be a long one over the next decade," the note said, adding that other major tech names, including Alphabet's (GOOG) Google, Amazon (AMZN), Oracle (ORCL), Salesforce (CRM) and Palantir (PLTR) will "collectively spend tens of billions in this AI arms race over the coming years."
The investment bank pointed out that Microsoft is in a "unique position to gain share in the cloud market that could expand Redmond's total addressable market around cloud by 35%-40% over the coming years."
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