The technology sector, propelled by the impetus provided by artificial intelligence, was the driving force behind the first-half stock market rally. Despite growing fears of a correction, a bullish analyst suggested on Friday that the rally will go on unhindered.
Just Getting Started: “It’s only 9 pm and the AI-driven tech bull party goes till 4 am,” said Wedbush analyst Daniel Ives in a note.
The analyst said his global fieldwork showed that the AI revolution has just begun with Nvidia Corp. (NASDAQ:NVDA) and Microsoft Corp. (NASDAQ:MSFT). The second, third, and fourth derivates of the revolution will start to play out over the next 12 to 18 months, he said, adding that a “tidal wave of $1 trillion of spending will come to the shores of the tech sector.”
Delving into the first-half performance of the tech stocks, Ives said they have had a very strong run, led primarily by big techs such as Nvidia, Microsoft, Amazon, Inc. (NASDAQ:AMZN) and Meta Platforms, Inc. (NASDAQ:META).
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Second-Half View: Ives reiterated his view that the tech stocks will rise 15% on top of their first-half gains, with ample help from an acceleration in tech fundamentals as AI use cases materially expand.
The enterprise AI revolution will be led by Nvidia and Microsoft, while on the consumer side, Meta, Apple, Inc. (NASDAQ:META), and Alphabet Inc.’s (NASDAQ:GOOGL) (NASDAQ:GOOG) Google will likely be the frontrunners, he said.
The winners of the next phase of the AI revolution will be the tech vendors that can monetize their installed bases with new AI platforms, the analyst said. On the other hand, the losers would be “players that get squeezed out of sales cycles, technology-driven platforms, and future growth opportunities as they do not have the tools/tech/software engineers to compete,” he said.
Top Picks: Ives listed nine stocks from across the tech industry as his top tech picks for the remainder of the year. Here’s how these stocks have fared in the first half:
| Company | H1’24 Performance | Sector/Category | Upside Potential* |
| Microsoft | +19.3% | Big Tech with exposure to AI | +8.6 |
| Apple | +9.7% | Big Tech with exposure to AI | (-0.7%) |
| Alphabet | +30.6% | Big Tech with exposure to AI | +7.2% |
| Palantir Technologies, Inc. (NYSE:PLTR) | +47.5% | Data analytics company with exposure to AI | (-12.8%) |
| Palo Alto Networks, Inc. (NASDAQ:PANW) | +14.0% | Cloud security software vendor | +0.4% |
| Check Point Software Technologies Ltd. (NASDAQ:CHKP) | +8.0% | Cloud security software vendor | +0.3% |
| CrowdStrike Holdings, Inc. (NASDAQ:CRWD) | +50% | Cloud security software vendor | +3.9% |
| Zscaler, Inc. (NASDAQ:ZS) | (-13.3%) | Cloud security software vendor | +17.0% |
| Salesforce, Inc. (NYSE:CRM) | (-2.2%) | CRM vendor with exposure to AI | +16.0% |
The Invesco QQQ Trust (NYSE:QQQ), an exchange-traded fund that tracks the Nasdaq 100 Index – comprising the 100 biggest non-financial tech stocks, rose 0.11% to $491.56 in premarket trading, according to Benzinga Pro data. The ETF is up 20.3% for the year.
The Technology Select Sector SPDR Fund (NYSE:XLK) edged up 0.08% to $232.35 in premarket trading.
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