TSLA
Tesla
-- 410.440 NVDA
NVIDIA
-- 144.470 CRNC
Cerence
-- 19.330 QSI
Quantum-Si
-- 4.290 MSTR
MicroStrategy
-- 339.660 
AI Revolution to Crown 10 Winners in 2025. Software Emerges as a Key Player
After a pullback in late 2024, AI stocks are expected to rebound and continue their upward trajectory in 2025, according to Dan Ives, a Wedbush analyst known for his accurate forecasts in the tech sector. Ives, who has earned acclaim for his predictions regarding major tech companies like Apple, Tesla, and Microsoft, as well as broader industry trends.
"We believe tech stocks will be robust in 2025 on the shoulders of the AI Revolution and $2 trillion+ of incremental AI capex (spending) over the next 3 years," Ives said in a client note on Tuesday.
Ives forecasts a 25% surge in tech stocks for 2025, facilitated by a more lenient regulatory environment expected under President-elect Donald Trump's administration and bolstered AI initiatives at the federal level.
Wedbush analysts have identified 10 potential major beneficiaries of the AI revolution, with $NVIDIA (NVDA.US)$ at the forefront. Key AI cloud players such as $Microsoft (MSFT.US)$ and $Alphabet-A (GOOGL.US)$'s Google Cloud, both gaining momentum in the cloud and AI arenas, are also expected to play significant roles.
In a recent earnings call, Microsoft CFO Amy Hood noted the overwhelming demand for Azure AI, its cloud-based AI platform, which has surpassed its current capacity. Hood anticipates further growth acceleration in Azure as new capital investments expand AI capacity to meet increasing demand in the second half of fiscal 2025.
Google's cloud division, including infrastructure and software subscriptions, reported 35% year-over-year growth in the third quarter, reaching $11.35 billion. This is a notable increase from the 29% growth in the previous quarter. This acceleration suggests Google is strengthening its position in the cloud computing and AI sectors.
For 2025, Ives anticipates major advancements in Edge AI applications, particularly from leaders like $Tesla (TSLA.US)$ and $Apple (AAPL.US)$. Tesla’s Full Self-Driving technology is expected to receive licensing in China in the first half of the year. Its Robotaxi service is planned to launch in California, and Texas in the second half. Meanwhile, Apple is gearing up for significant expansion in generative AI, despite earlier criticisms of its delayed entry into the market. The company is also expected to partner with a local tech firm next year to integrate AI into Chinese iPhones.
Additionally, as Ives highlighted in the note, the software industry is set to capitalize on the AI boom. He predicts that the exploding number of use cases, the onset of an enterprise consumption phase in 2025, the rollout of LLM models, and the widespread adoption of generative AI will collectively act as a major catalyst for the software sector and its key players.
Among the software contenders, $Palantir (PLTR.US)$ and $Salesforce (CRM.US)$ are viewed as the frontrunners, but other firms, including $MongoDB (MDB.US)$, $Pegasystems (PEGA.US)$, and $Snowflake (SNOW.US)$, are also well-positioned to leverage the AI revolution.
Looking into 2025, the AI wave is expected to drive the next surge in software investment, revenue growth, and profit margin expansion, shifting the market focus from infrastructure development to application and monetization.
On the risk side, the potential overvaluation of software companies due to high expectations and uncertainties about the actual winners in the AI space poses a risk. This could lead to disappointments if the anticipated outcomes are not achieved.
Additionally, concerns are rising about tech giants' capital expenditure patterns and their impact on the valuations of hardware companies that depend on these expenditures. While tech giants' spending is expected to increase, growth rates may be affected by macroeconomic conditions and revenue conversion, potentially disrupting the valuations of downstream AI hardware firms.
Furthermore, Trump's proposed import tariffs, along with ongoing worries about the Federal Reserve's high-interest rate policy, could pose additional threats to the tech sector.
Source: Businessinsider, X
Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only.
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