Nvidia (NASDAQ:) became the world's most valuable company this week, surpassing Microsoft (NASDAQ:) and Apple (NASDAQ:) earlier this month. Wedbush analysts believe the race for $4 trillion in market cap in the tech sector will be a key focus over the coming year, primarily between these three companies.
“With the Fourth Industrial Revolution in full swing and more businesses and consumers rapidly embarking on this path, Nvidia's GPU chips are essentially the new gold and oil in the tech sector,” Wedbush analysts said in a note.
The investment firm notes that Nvidia's dominance in data center AI spending has positioned the company as a key player in the AI revolution, with all generative AI applications relying on the company's GPUs. Nvidia and Microsoft are seen as the primary beneficiaries of this trend, with second and third order effects beginning to play out, supporting a tech bull thesis for 2024/2025.
Wedbush predicts that over the next three years, more than 70% of businesses will adopt AI use cases, leading to an increase of $1 trillion in AI spending over the next decade.
Wedbush analysts say the AI opportunity for Apple is two-fold.
The rollout of the AI strategy is likely to trigger a significant iPhone upgrade cycle for its massive user base, and developers will likely build a multitude of apps on Apple's AI platform, essentially building a new AI App Store over the next few years. The analyst believes this “will become the primary way consumers interact with generative AI.”
“While Apple, with the world's largest consumer installed base, is lagging behind in AI, Cook and co. have a unique advantage to monetize the AI party at this 1995 moment,” Wedbush's team wrote.
