Early-Stage AI Boom Signals Further Gains for Technology Equities

The artificial intelligence investment cycle remains in its early stages, with further upside expected for technology equities, according to Dan Ives, who projects an additional 15% gain in the sector this year.

In an interview with CNBC, Ives described the current phase of AI adoption as “the third inning of a nine-inning game,” signaling continued momentum despite persistent geopolitical uncertainties. He emphasized that capital expenditure trends remain the most critical indicator for assessing the health and trajectory of the technology sector.

The analyst pointed to mounting evidence that AI-driven demand is expanding across the broader industry. Texas Instruments reported a 90% year-on-year increase in its AI-focused data center segment, while improving signals from Intel and growth at Cisco Systems and Dell Technologies reinforce the breadth of the cycle.

Ives also highlighted the multiplier effect tied to AI infrastructure spending, estimating that for every dollar invested in chips from Nvidia, between $8 and $10 is generated across the broader technology ecosystem.

Looking ahead to upcoming earnings from hyperscalers, Ives expects a shift from pure capital expenditure toward monetization. He anticipates improving performance among cloud leaders such as Amazon, Alphabet, and Microsoft, as AI-driven revenue streams begin to materialize more clearly.

Beyond mega-cap technology firms, Ives identified Palantir Technologies as a key beneficiary of the AI cycle, positioning it at the “epicenter” of the trend. He projected that the company could reach a trillion-dollar market capitalization within the next two to three years, reflecting strong conviction in AI-focused business models.

Demand dynamics continue to underpin the bullish outlook. According to Ives, demand for Nvidia’s chips currently exceeds supply by a ratio of roughly 12 to one, based on recent industry observations in Asia.

The outlook underscores a market increasingly anchored in AI-driven capital deployment, with investors closely watching earnings season for confirmation that monetization is beginning to match the scale of investment.