Dan Ives Says ‘Future AI Tech Winners Are Being Built’ As Software-Led Spending Wave Looms

• Ives dismissed market concerns about enterprise software and cybersecurity becoming obsolete in the future due to AI tools like Anthropic’s Claude and OpenAI.
• He also noted that while there was no clear evidence yet that enterprises are increasing spending on AI agents and platforms, in the near future, software-led AI spending will accelerate significantly.
• The analyst also spotlighted Palo Alto Networks as positioned to gain from the eventual software spending boom.

As Wall Street grapples with artificial intelligence jitters that have rattled tech stocks in recent weeks, Dan Ives, managing director at Wedbush Securities, said investors risk missing the next wave of tech winners.

In a note posted on X on Wednesday, titled ‘The AI "Threat" Doomsday Trade is Like Fighting a Ghost,’ Ives said that the future AI tech winners were currently being built, although many investors are missing the narrative “like other ones over the decades in tech.”

Ives also highlighted the software, cybersecurity, and IT infrastructure industries as “key pillars” of the future AI Revolution.

The note comes amid rising volatility in the tech sector as investors contend with massive AI-related capital expenditures planned for 2026 that are now inching towards $700 billion.

Misplaced Fears

In the note, the analyst framed the current market sentiment around AI as a “fear of the unknown,” amid ballooning capex across hyperscalers even as monetization remained elusive. For the market bulls, he said it was like “fighting a ghost in a dark closet.”

He dismissed market concerns about enterprise software and cybersecurity becoming obsolete in the future due to AI tools like Anthropic’s Claude, and OpenAI, calling this “software doomsday trade” a “fictional concept.”

“...the reality is dramatically different as the complexity of enterprises today make this a nearly impossible task,” he said in the note. Highlighting the importance of data, processes, security, organizational structure, IT architecture, and software layers, he said that these functions are “the hearts and lungs” of modern enterprises.

Ives also noted that while there is no clear evidence yet that enterprises are increasing spending on AI agents and platforms, in the near future, software-led AI spending will accelerate significantly.

“Can they show today that enterprises are spending on their AI agents and platforms? NO....but in the next 12 to 18 months this will be a software led tidal wave of spending given the timing of many of these use cases and AI deployments,” he said in the note. “This is the next stage of our tech bull AI thesis that we first discussed in early 2023,” he added.

Ives’ Rationale

Ives said that over his 25 years of experience on Wall Street, markets have repeatedly misjudged major tech shifts.

Fears that Microsoft’s play would crush cybersecurity, Intel would dominate chips, and cloud leaders like Amazon Web Services would beat out the competition ultimately proved misplaced.

However, today, companies such as Nvidia and Advanced Micro Devices (AMD) dominate the semiconductor market. “The chip industry was going to be dominated by Intel a decade ago with smaller players like Nvidia at the time essentially an afterthought only good at gaming chips...and the market would give minimal respect to the likes of AMD, Nvidia, and others,” he said.

“The rest is history with the Godfather of AI Jensen and Nvidia now the one chip fueling the AI Revolution and Intel playing major catchup,” Ives added.

Meanwhile, Google and Microsoft are now thriving in cloud computing, driving value and monetization for both tech companies that “puts them in pole position on the AI Revolution front,” he said.  Ives argued that current market fears about AI destroying enterprise software is another overblown market narrative.

The analyst also spotlighted Palo Alto Networks Inc. (PANW) again to be positioned to gain from the eventual software spending boom, saying the company was sitting “squarely at the top of the cyber security mountain with this CyberArk deal to monetize the AI cyber TAM as it hits over the next 12 to 18 months.”

Market Movement

Meanwhile, U.S. equities trended higher on Wednesday. The SPDR S&P 500 ETF (SPY), which tracks the S&P 500 index, was up by 0.83% at the time of writing, while the Invesco QQQ Trust ETF (QQQ) rose 1.34%.

The tech-heavy Nasdaq 100 gained 1.34% at the time of writing, the Technology Select Sector SPDR Fund (XLK) was up 1.83%, and the VanEck Semiconductor ETF (SMH), which tracks the top 25 U.S.-listed semiconductor companies, was up 2.27%.

Shares of PANW were down more than 6% at the time of writing, while the stock has declined more than 26% in the past year. On Stocktwits, retail sentiment around the shares was in the ‘extremely bullish’ territory over the past 24 hours amid ‘extremely high’ message volumes.

For updates and corrections, email newsroom[at]stocktwits[dot]com.

Share

·

Add us on