Strong Q3 Tech Earnings Forecasts from Wedbush

Investing.com — Wedbush analysts predict a strong third-quarter tech earnings season fueled by robust enterprise spending and a revival in digital advertising. They believe the ongoing "AI revolution" will elevate tech stocks through the year's end.

Analysts suggest the earnings season's primary theme will mark the onset of the next phase of the AI revolution. Leaders in hyperscale cloud, including Microsoft (NASDAQ:MSFT), Google (NASDAQ:GOOGL), and Amazon (NASDAQ:AMZN), are set to report significant growth, exceeding Wall Street projections as workloads continue migrating to the cloud. This migration is expected to lay the groundwork for numerous AI enterprise use cases by 2025.

Wedbush emphasizes that this cloud strength is not limited to just the Big Three. Companies like Oracle (NYSE:ORCL), SAP SE ADR (NYSE:SAP), IBM (NYSE:IBM), ServiceNow (NYSE:NOW), and Dell (NYSE:DELL) are identified as key players that will see enhanced growth as enterprises speed up their AI and cloud integrations. This trend aligns with what Wedbush calls the "second derivative" of the AI revolution.

The analysts project that by the end of 2025, 70% of global workloads will reside on the cloud, up from less than 50% currently. Wedbush holds a positive outlook for tech stocks, anticipating an additional 20% rise by 2025.

As the Federal Reserve under Jerome Powell enters a rigorous rate-cutting cycle, they foresee a macroeconomic soft landing as the most plausible outcome. They stress that AI expenditure signifies a generational shift in tech investment, which has just begun influencing the sector.

Their estimates suggest that every $1 spent on an Nvidia (NASDAQ:NVDA) GPU chip produces an $8-$10 multiplier effect across the tech industry, reinforcing their optimistic perspective on tech stocks in the coming year.

While Nvidia and Microsoft are viewed as primary engines of AI, Wedbush also acknowledges the increasing involvement of other tech giants such as Oracle, SAP, ServiceNow, Palantir (NYSE:PLTR), Salesforce (NYSE:CRM), Dell, IBM, Apple (NASDAQ:AAPL), and AMD (NASDAQ:AMD), among others.