Broker sees recent sell-off in AI-linked tech stocks as temporary, citing $700 billion in 2024 capital spending by Big Tech.
A sharp decline in major technology stocks is a short-term overreaction rather than a collapse in the artificial intelligence trade, Wedbush said. The broker highlighted Microsoft, Nvidia, and Meta as core names facing heavy selling pressure despite leading the AI-driven fourth industrial revolution.
Wedbush estimates Big Tech will spend $700 billion on AI infrastructure this year, creating an “air pocket” as revenue gains lag behind capital expenditure. The broker noted frustration among investors over the delayed payoff, particularly for Microsoft and Meta, which are in a six- to 12-month transition phase.
Memory chipmakers like Micron have outperformed during the pullback, underscoring a disconnect between AI infrastructure builders and beneficiaries. The broker dismissed the sell-off as a “Twilight Zone” moment for the sector.