Investing.com — Tech stocks have been under pressure as markets reopen following the Labor Day holiday. However, analysts at Wedbush remain unfazed by the recent selloff, saying their “bullish thesis for the tech sector remains unchanged.”
“As we take note of the uncertain economic/jobs data and preparations for the November US presidential election, we view this massive sell-off in tech stocks as a buying opportunity for the primary winners of this AI revolution,” Wedbush analysts said in a note on Tuesday.
The investment firm highlighted last week’s Nvidia (NASDAQ:) earnings and conference call as a key moment in strengthening the case for the rise of artificial intelligence.
While the immediate reaction to Nvidia’s strong results and guidance was muted, they believe demand for AI is significantly outstripping supply. With concerns about Blackwell’s delays now addressed, analysts see no major hurdles to continued growth in the AI sector as the year comes to a close, despite some concerns about a recession.
“The stage is set for a tech bull run through the end of the year and into 2025, in our view,” the analysts wrote, as they expect the Fed to start cutting rates, the economy to see a soft landing, and AI spending to drive a long-term shift in tech investment.
Wedbush continues to estimate that for every dollar spent on an Nvidia GPU chip, there is an $8-$10 multiple across the tech sector, reinforcing their bullish stance on tech stocks for the year ahead.
“Looking back, Nvidia has changed the tech and global landscape with its GPUs becoming the new oil and gold in the IT landscape, with its chips powering the AI revolution and being the only game in town right now,” Wedbush continued.
Nvidia shares plunged 9.5% on Tuesday, marking the biggest one-day loss in market value for a U.S. company and wiping $279 billion off its market value, as investor enthusiasm for artificial intelligence slowed amid weak economic data and a broad market sell-off.
The broader PHLX semiconductor index also fell 7.75%, its biggest drop since 2020.