With the Federal Reserve set to start cutting interest rates this week, analysts believe tech stocks could see big gains.
The start of a rate-cutting cycle This will be a positive signal for the market.Things have been relatively calm since the market crash in August. The “fear index” soarsTo this, Technology spending surges Wedbush researchers led by Dan Ives said in a note that artificial intelligence (AI) will create ideal conditions for tech stocks.
“Simply put, we believe tech stocks are poised to rise through the end of the year and into 2025,” Ives said.
Interest rates have been hovering at a 23-year high of 5.25% to 5.50% since July 2023. The Federal Open Market Committee is widely expected to cut rates by 25 basis points when it meets on Sept. 17-18. Ives said the soft landing of the U.S. economy and a “generational spending cycle” on AI will create an ideal growth environment for the sector.
The investment firm is a wholly owned subsidiary of Nvidia (NVDA) GPU Chipwith a multiplier effect of $8 to $10 across the tech sector as a whole. Ives said the tech supply chain appears to be gearing up for a “period of unprecedented growth” driven by an estimated $1 trillion in AI spending over the next few years.
Ives said the move will inspire other technology companies, from semiconductors and software to infrastructure, internet and smartphones, to get involved in AI efforts over the next 12 to 18 months.
“Nvidia and Microsoft (MSFT) is the central driving force behind AI, and now Oracle (Orks), ServiceNow (now), Palantir (P.L.T.R.), Salesforce (Customer Relationship Management), Dell (Dell), IBM (IBM), apple (AAPL), AMD (Am) and others,” he said.
Despite market concerns over AI spending, strategists say Nvidia’s revenues will The green light for Big Tech To keep this spending rush going, the chipmaker reported. Second quarter sales reach record high of $30 billion This year’s figure represents a 122% increase from last year, analysts said. Projected revenue: $28.7 billion Second-quarter sales were more than double the $13.5 billion recorded in the same period last year, according to FactSet.FDS).
Nvidia chips Training a generative artificial intelligence model — has become a barometer of the health of AI demand and interest due to its outsized role in the field. The company’s stock price is Market driving forceThe company’s shares have risen 147% so far this year, giving it a market capitalization of $2.92 trillion, but they have fallen more than 4% in the past month as markets brace for the Fed’s decision.
