The Federal Reserve’s decision to lower the federal funds rates rate by 50 basis points is a “very bullish backdrop” for a risk-on trade of big tech companies and artificial intelligence heading into 2025, Wedbush said in a note Thursday.
The rate cut was the “missing piece” in the puzzle as a lot of investors were looking for a green signal for the tech growth trade into this year’s end and 2025, analysts led by Daniel Ives wrote.
The tech supply chain is preparing for a huge growth period ahead as roughly $1 trillion of artificial intelligence capital expenses are expected to be on the horizon in the near future, the analysts said.
“We continue to strongly believe its 9 pm in the AI Party that goes till 4 am,” Wedbush said.
Alongside Nvidia (NVDA) and Microsoft (MSFT), many other tech companies are joining the AI party including Oracle (ORCL), ServiceNow (NOW), Palantir Technologies (PLTR), Salesforce (CRM), Dell Technologies (DELL), International Business Machines (IBM), Apple (AAPL), Advanced Micro Devices (AMD), and others, the analysts said.
“We continue to estimate for every $1 spent on an Nvidia GPU chip there is a $8-$10 multiplier across the tech sector which speaks to our firmly bullish view of tech stocks over the next year,” according to the Wedbush analysts.