Arguably, there has been no bigger bull in the artificial intelligence (AI) rally than Wedbush’s Dan Ives.
Ives has been cheering the AI ​​boom since shortly after ChatGPT’s debut. In February 2023, the analyst said an AI arms race was brewing following the launch of the generative AI chatbot.
This statement was confirmed, as Nvidia has taken a lead among chip stocks and has weathered recent challenges AMD And Intel. In addition, cloud infrastructure companies such as Microsoft, Alphabet, AmazonAnd Oracle are quickly purchasing Nvidia components to meet the AI ​​demands of their own customers.
Ives’ prediction that tech stocks would rise 20% by 2023 was also correct, as tech stocks Nasdaq index ended at 24%. He also called 2024 the “year of AI” and said tech stocks would rise 25%. That was also true.
Now Ives is hammering that tech stocks will continue to rise in 2025, driven by the AI ​​boom. In a recent post on
Image source: Getty Images.
Ives has previously argued that the AI ​​boom will take the form of a multi-year stock market rally, much like the dot-com boom of the 1990s, which lasted five years before ending in a crash.
Despite some concerns that an AI bubble could be forming, signs overall point to a continued rally in AI stocks. First, sales and profits will likely continue to rise as stocks like Nvidia continue to report rapid growth and other stocks join the AI ​​rally, including Micron and now a number of software companies.
There are also larger macro trends that could push tech stocks higher. Ives noted a particular benefit of Lina Khan’s resignation as head of the Federal Trade Commission. Khan has led several high-profile lawsuits against major tech companies, and the regulatory environment under President Trump is expected to be friendlier to big business.
Additionally, investors appear to be anticipating the new administration’s support for AI initiatives as tech stocks have rallied post-election. Meanwhile, the race to artificial generative intelligence is in full swing, and as long as companies like OpenAI work to achieve that goal, cybersecurity spending will likely remain high.
Technology stocks are entering 2025 with a lot of momentum, but the biggest risk factor right now is valuation. The Nasdaq has risen more than 50% in the last two years, and is now about as expensive as it has ever been since the dot-com bubble.
The Invesco QQQ Trust (NASDAQ: QQQ)which the Nasdaq100or the 100 most valuable Nasdaq stocks, now trade at a price-to-earnings (P/E) ratio of 35, and many of the “Magnificent Seven” stocks that make up a large portion of the Nasdaq’s value appear inflated. AppleFor example, it now trades at a price-to-earnings of 41, and its market cap is approaching $4 trillion, even though revenue is only expected to grow by mid-single digits this year.
Ives’ optimistic stance is not unreasonable, as spending on capital infrastructure to support AI is likely to increase. But with valuations already looking stretched, delivering another 25% gain for the Nasdaq won’t be that easy.
Instead of diving into tech stocks on autopilot, a better strategy would be investing tactfully in this sector. Wait for a decline in specific stocks after due diligence into the underlying businesses, or buy ETFs like the Invesco QQQ Trust to help diversify risk, or use a combination of both.
With stocks trading at high valuations and a new administration likely to introduce more uncertainty into the stock market, 2025 is likely to be a volatile year for investors. But they will likely have opportunities to benefit from selloffs, just as we saw after the Federal Reserve scaled back its forecast for rate cuts.
Keeping some dry powder on hand for such moves will almost always pay off, as the AI ​​boom still has the ability to take the tech sector to the next level in the years to come. But there should be plenty of pullbacks as the market grapples with higher prices for the biggest tech stocks.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, a director at Alphabet, is a member of The Motley Fool’s board of directors. Jeremy Bowman has positions at Amazon. The Motley Fool holds positions in and recommends Advanced Micro Devices, Alphabet, Amazon, Apple, Intel, Microsoft, Nvidia, and Oracle. The Motley Fool recommends the following options: long January 2026 $395 calls at Microsoft, short February 2025 $27 calls at Intel, and short January 2026 $405 calls at Microsoft. The Motley Fool has a disclosure policy.
Wall Street analyst Dan Ives sees technology stocks rising another 25% by 2025. Time to buy? was originally published by The Motley Fool
