Wedbush Securities analyst Daniel Ives has significantly increased his optimism on the next phase of the AI revolution, focusing on its transformative impact on the software sector.

The analyst projects a monumental shift driven by generative AI adoption, enterprise consumption, and large language model (LLM) launches. As a result, Ives has upgraded Snowflake Inc (NYSE:SNOW) and Elastic NV (NYSE:ESTC) to Outperform and raised price targets for Palantir Technologies Inc (NYSE:PLTR) and Salesforce Inc (NYSE:CRM) to reflect their enhanced growth potential.

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Ives notes Snowflake has moved past its "optimization" phase, citing substantial quarter-over-quarter improvements in product revenue. Snowflake stands to gain from the explosion of AI use cases over the next 12 to 18 months, positioning itself as a pivotal player in the enterprise adoption of generative AI.

The analyst upgraded Snowflake to Outperform, raising its price target to $190, supported by a 30x long-term free cash flow (FCF) estimate.

For Elastic, Ives highlights its strategic alignment with enterprises shifting to next-generation platforms. Customers are consolidating spending by moving from legacy vendors to Elastic's AI-powered solutions bolstered by the company's express migration program.

Ives upgraded Elastic to Outperform with a new price target of $135, based on 8x its fiscal year 2026 enterprise value-to-revenue (EV/Revs) ratio.

Ives raised his price target for Palantir from $57 to $75, leveraging a 38x long-term FCF target. He cites Palantir's groundbreaking AIP strategy, which enables enterprises to harness AI across diverse use cases. The company's robust product suite is expected to drive unprecedented demand as businesses increasingly recognize its value.

Ives increased his price target for Salesforce from $325 to $375, citing a 28x long-term EBITDA valuation. His research indicates rising customer enthusiasm for Salesforce's AI-integrated product offerings, which drive the company's next wave of growth.

Ives sees the broader software sector as entering an inflection point, projecting $2 trillion in AI spending in the coming years. With enterprises set to adopt AI at scale by 2025, companies like Snowflake, Elastic, Palantir, and Salesforce are poised to benefit from this unprecedented technological revolution.

Price Actions: SNOW stock is up 3.12% at $172.67 at last check Monday. ESTC is up 3.85%, PLTR is up 0.80% and CRM is down 0.21%.