Wedbush advises buying stocks during a "mini panic" in the market. Why is he waiting for a rally?
The biggest sell-off in U.S. stocks in a month gives investors a good buying opportunity ahead of the "Santa Claus rally," according to Wedbush analysts led by Dan Ives.
"We believe tech stocks will show a strong rally in the remaining months of the year as investors look to capitalize on the AI revolution and its indirect impact in the consumer and corporate segments," Wedbush analysts said in a note cited by Seekinga Alpha.
They called the Nov. 14 selloff in technology stocks a "brief mini panic attack" in the technology sector. On that day, the Nasdaq Composite Technology Index shed more than 2%, and the Dow Jones and S&P 500 lost more than 1.6%.
What does Wedbush believe will fuel the rally?
The main outcome of the third-quarter reporting season for technology companies was strong results from the cloud divisions of Microsoft, Amazon and Google's parent company Alphabet, analysts said.
In addition, capital expenditure is expected to rise sharply in 2026 - largely driven by Meta Platforms and other major market players. Analysts estimate that Big Tech's total capital expenditures in 2026 could approach $550-600 billion, up from about $380 billion this year, as the next phase of AI-related growth begins.
"It's an AI arms race. The new chapter of growth is being fueled by increased Big Tech spending, and this is NOT slowing down on the way to 2026. Cisco's strong quarter and optimistic outlook is another positive signal this week. We see this as a powerful positive and a reaffirmation of our bullish stance on the AI revolution," Ives and his team noted.
Wedbush analysts believe that Nvidia's report, which will be released next week, will be the next major confirmation of the AI revolution and act as a positive driver for the technology sector for the rest of the year. Investors, in their view, continue to underestimate the scale and speed of AI spending growth.
On Friday, investors seemed to follow the advice of analysts: despite the fact that trading opened sharply down, over the next couple of hours, the S&P 500 and Nasdaq Composite went into the plus side. Microsoft shares rose more than 1%, Tesla and Nvidia gained almost 2%, and Palantir soared 2.5%.
This article was AI-translated and verified by a human editor
