Dan Ives Says Upcoming Earnings Season Is A Huge Validation Moment For Big Tech — Expects Significant Outperformance Of Mag 7 Ahead

• Ives described the spending spree of hyperscalers as the foundation of the AI revolution.
• He likened the current phase of the AI buildout to the construction of the Las Vegas Strip.
• Ives added that AI investments by companies like Meta Platforms, Microsoft, Alphabet and Amazon are backed by clear long-term business strategies.

Wedbush’s Global Head of Tech Research, Dan Ives, said Tuesday that the upcoming earnings will be a “huge validation moment” for big tech, adding that he expects the Magnificent Seven (MAG 7) stocks to significantly outperform in the second half of the year.

Ives said AI investments by companies like Meta Platforms (META), Microsoft (MSFT), Alphabet (GOOG, GOOGL), and Amazon (AMZN) are backed by clear long-term business strategies.

“I mean, when you look at Meta, they’re not just spending to spend. You look at Microsoft. They essentially own the enterprise. Alphabet, 5% of their customers have gone to the AI path. Same thing with Amazon,” Ives said in an interview with Bloomberg.

“So my whole point is you’ve had this tech rally, but MAG seven right now is in the penalty box essentially. I think it will significantly outperform in the second half of the year. And I think earnings season will be a huge validation moment for big tech,” Ives added.

Hyperscalers Are Funding The AI Revolution

Ives dismissed the view that Wall Street is growing wary of hyperscalers’ massive capital expenditures. Instead, he described the spending spree as the foundation of the AI revolution, comparing it to the early construction of the Las Vegas Strip.

“Because what the hyperscalers are doing is the build-out. It’s Vegas Strip building in 1955. But, ultimately, the monetization now is going to come,” he said.

Ives also pointed to JPMorgan's projection of $5.5 trillion in AI-related capital spending by 2030, saying the scale of investment continues to accelerate rather than slow.

Earlier this month, JPMorgan raised its forecast for global AI-related capital spending to $5.5 trillion by 2030, up from $5.1 trillion, while lifting its estimate for AI-related debt financing to $4.1 trillion.

Retail’s Take On MAGS

Retail sentiment surrounding the Roundhill Magnificent Seven ETF (MAGS) on Stocktwits remained in the ‘extremely bullish’ territory over the past 24 hours.

The ETF shed around 9% of its value over the past month and a little over 2% so far this year. The SPDR S&P 500 ETF (SPY), which tracks the S&P 500 index, has gained 9% this year, the Invesco QQQ Trust ETF (QQQ) surged over 19% while the SPDR Dow Jones Industrial Average ETF Trust (DIA) gained roughly 8%.

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