Ahead of Nvidia Corp.’s NVDA earnings on Wednesday, Wedbush analyst Daniel Ives sounded upbeat about about AI-levered stocks and offered his take on what to expect from the AI stalwart’s quarterly report.
Beat In The Cards: The big debate between bears and bulls, coming into 2024 was around monetization of the AI revolution, said Ives in a note. Investors were seeking proof for enterprise spending ramping up to justify the valuations of AI-levered stocks, he said.
Big techs such as Microsoft Corp. MSFT, Alphabet, Inc. GOOGL GOOG, Meta Platforms, Inc. META, Amazon, Inc. AMZN and others confirmed over the last few weeks that “AI monetization is now well underway hitting the shores of the tech sector,” he said, adding that this completed the first part of the puzzle.
Ives also noted that there have been eye-popping and impressive developer conferences from OpenAI, Google and Microsoft over the last week and Apple, Inc. AAPL is all set to unveil its AI vision and product framework at the annual Worldwide Developer Conference in June.
Now it is up to Nvidia and its CEO Jensen Huang to fill in the remaining piece of the puzzle, Ives said. “The biggest piece of filling in this AI puzzle with all the Street watching is now hearing from the Godfather of AI Jensen and Nvidia today after the bell with earnings and of course importantly its guidance,” he said.
The Street is bracing for a “beat-and-raise” from Nvidia, Ives noted.
Trading floors across Wall Street will watch with rapt attention Huang’s comments at the conference call, the analyst said.
See Also: Best Artificial Intelligence Stocks
Street’s Focus: “The AI Revolution starts with Nvidia and in our view, the AI party is just getting started with the popcorn getting ready,” Ives said. The focus will be on the pace of data center AI-driven spending, as Nvidia enjoys a near monopoly position in the market for GPUs used to run generative AI applications, he added.
Ives said he is laser-focused on the trajectory of GPU orders and demand flow from enterprises.
The analyst also shrugged off concerns about the valuations of AI stocks. “For the elite, transformational tech stories such as Nvidia and the AI Revolution, investors must see the forest through the trees to where this spending wave (and estimates) can head over the next 3 years,” he said.
The analyst estimates $1 trillion in incremental AI spending over the next decade, as 60%-70% of enterprises are poised to ultimately head down the AI use case path. Additionally, the consumer piece of generative AI is also on the horizon, led by Alphabet, Meta, Amazon, Microsoft, Apple and others, he added.
At last check, Global X Robotics & Artificial Intelligence ETF BOTZ fell 0.62% to $31.38 on Monday, according to Benzinga Pro data. Nvidia, meanwhile, rose 0.29% to $956.61.
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