Nvidia and Microsoft to reach $4 trillion capitalization as soon as this summer - Wedbush

Shares of Nvidia and Microsoft will join the club of companies with capitalization of $4 trillion already this summer - thanks to the rapid growth of interest in artificial intelligence, predicts Wedbush Securities. These securities are showing an impressive recovery in the current quarter after a weak start to the year, according to a note by investment bank analyst Dan Ives, whose recommendations in the technology sector have earned him widespread popularity among private investors.

Nvidia and Microsoft will reach $4 trillion in market capitalization over the summer as investors shrugged off concerns over restrictions on AI chip shipments to China and the threat of global duties, according to Dan Ives, head of technology research at Wedbush Securities, his note reports CNBC. «The focus will then shift to the $5 trillion mark over the next 18 months as the bull market in the tech sector is just beginning and is driven by the AI revolution, the analyst wrote.»

Ives is known for his optimistic view of artificial intelligence development, which is generating a «Game of Thrones-style arms race,» as he announced last week. In a new note, the analyst recalled that the hype around AI and record investment in AI infrastructure has been a powerful driver of tech sector growth, with Nvidia and Microsoft «acting as the main faces of the AI revolution.» 

«They are at the heart of the biggest technology trend we've seen in our 25 years on Wall Street,» wrote Ives. 

Nvidia's current capitalization is about $3.83 trillion and Microsoft's is $3.69 trillion.

Last week, Nvidia securities rose for five consecutive trading sessions and reached a new all-time high of $157.75. On Monday, June 30, they finished trading at a new record of $157.99. The chipmaker's shares rose about 17% over the month and 44.5% since the beginning of the quarter.

Microsoft quotes have also been on the rise for the past five sessions. They have added about 8% for the month and 32.5% since the beginning of the quarter. On Monday, the company's securities strengthened to $497.4.

Ives estimates that every $1 spent on Nvidia creates an $8-10 multiplier effect for the rest of the tech sector: the so-called hyperscalers, i.e., the largest companies that manage cloud infrastructure to handle massive amounts of data, players in cybersecurity, software, semiconductors, the Internet, autonomous technologies and robotics.

Among the specific beneficiary stocks, the Wedbush analyst mentioned Microsoft, Google and Amazon, whose cloud divisions (Azure, Google Cloud and Amazon Web Services) continue to expand. Advanced Micro Devices (AMD) is also participating in this «party,» Ives added. 

«The impact of the AI cycle on the consumer internet will be enormous, and it will start with cloud platforms AWS and Google Cloud. They will purchase AI chips, build AI services based on them and offer them to their customers,» the analyst explained. According to him, Microsoft, Amazon and Google have already identified priority program scenarios of AI application, which are now rapidly developing in different industries.

«The key is the explosive growth in usage scenarios, which is what is driving this software- and chip-based technology transformation. This is why we continue to maintain our bullish outlook on technology,» Ives concluded. 

This article was AI-translated and verified by a human editor