Still questioning the "AI hype"? American investment banks: Q1 earnings season proves everything, and the next catalyst will be NVIDIA!

Caixin Global May 12 News (Editor Huang Junzhi) Wall Street’s well-known investment bank Wedbush has issued its latest statement, saying that the U.S. stock market’s Q1 earnings season has sounded an alarm for tech skeptics who have been standing on the sidelines watching the artificial intelligence (AI) revolution, and that Nvidia’s upcoming earnings report next week should serve as another catalyst for upside momentum in tech stocks.

In an investor report released on Monday by the team led by the firm’s well-known analyst Dan Ives, it pointed out that recent earnings reports from multiple technology companies clearly show that enterprise AI spending is accelerating rather than slowing down.

They cited the impressive results turned in last week by U.S. chip giant AMD: adjusted earnings per share (EPS) for Q1 was $1.37, versus expectations of $1.29; revenue was $10.25 billion, up 38% from $7.44 billion a year earlier, versus expected revenue of $9.89 billion. For the second quarter, AMD said it expects revenue of about $11.2 billion, while analysts forecast $10.52 billion.

In addition: Palantir’s first-quarter revenue grew 85% year over year, setting the fastest growth rate since its listing, and it raised its full-year guidance to $7.65 billion; Datadog achieved first-quarter revenue for the first time exceeding $1 billion, with its stock surging 28% in a single day; Twilio also recorded the highest growth rate in three years.

Wedbush analysts said that these results confirm that AI is moving from concept to meaningful revenue contribution. They also noted that Nvidia’s upcoming results report is seen as another potential catalyst for the technology sector.

Nvidia is expected to release its fiscal 2027 first-quarter results on the U.S. stock market after the close next Wednesday (the 20th) (early Thursday morning Beijing time).

The firm wrote that the demand-supply imbalance surrounding Nvidia’s Blackwell and Rubin AI chips remains “very favorable,” and that enterprise AI projects related to Microsoft, Alphabet’s Google, and Amazon’s cloud platforms will continue to accelerate.

The report emphasized, “We still firmly believe that the commercialization phase of artificial intelligence has only just begun, and this is undoubtedly good news for the next stage of building AI architectures for hyperscale cloud service providers.”

“We believe the market has underestimated the cloud growth/AI deal conversion rate of Microsoft Azure and Amazon AWS over the next year… and the positive data recently released by companies such as Palantir, Datadog, and Innodata indicate that a demand wave driven by use cases is about to arrive.” they added.

Ives believes that by the end of this year, tech stocks may rise another 10% to 12%, because investors are starting to realize that products offered by companies like Anthropic and OpenAI will not bring “doom” to software companies.

In particular, he is very bullish on several cybersecurity vendors, such as CrowdStrike, Palo Alto Networks, Zscaler, and Rubrik.

Ives wrote: “So far, many of our conversations with chief information officers (CIOs) / chief information security officers (CISOs) have mentioned that the powerful LLM models from Anthropic and OpenAI are driving the growth of the cybersecurity industry. As the number of attack surfaces, threats, and agent personnel increases, budgets in the coming quarters will rise significantly.”

“It is crucial that AI does not reduce the demand for automation of endpoints (and vendors), identity, cloud, and security operations center operations; on the contrary, as more enterprises deploy LLM-based agents, their demand for runtime monitoring, identity governance, and zero-trust enforcement will grow exponentially, because cybersecurity will become the execution layer of AI rather than its victim.” he added.