Artificial intelligence stocks are not overheating — they are just beginning to show their potential.
That is the view of Wedbush Securities analyst Dan Ives, who says Wall Street bears are mistaking a rapid technological shift for exuberance.
In his view, the scale of AI adoption and capital investment suggests that markets have not yet approached peak enthusiasm.
Speaking to Yahoo Finance, Ives argued that comparisons to the dot-com era overlook fundamentals that are more robust than in 1999.
Only a small share of companies today have incorporated AI into their systems.
In the US, adoption sits at roughly 3%, and worldwide it is closer to 1%, he noted.
For Ives, the noise of AI enthusiasm masks a simpler truth: the industry is still in its opening chapters.
Why Ives dismisses bubble warnings
Ives’ latest report builds on that argument, pointing to enterprise spending, government projects, and semiconductor shortages as the true drivers of valuations.
These conditions, he said, reflect structural demand rather than speculation.
At the height of the dot-com boom, the average tech stock traded at 30 times revenue with little product to back it up.
Today, the biggest AI players are companies with global customer bases and vast cash reserves.
A shortage of Nvidia processors underlines his argument.
Nvidia supplies chips to Amazon, Alphabet, Microsoft and other major technology platforms.
Ives believes this imbalance between supply and demand shows that AI infrastructure remains underbuilt, not overvalued.
He sees the supply chain lag as a sign that the market has yet to experience the scale of monetisation that lies ahead.
The companies he thinks will define the next decade
The Wedbush analyst highlights several firms that he believes are indispensable to AI’s next stage.
Microsoft (MSFT): Positioned to benefit most as companies integrate AI tools into everyday operations.
Palantir (PLTR): Increasingly indispensable for governments and corporates deploying AI-driven platforms.
Nvidia (NVDA): Supplies the chips behind the majority of global AI development and infrastructure.
Advanced Micro Devices (AMD): Poised to expand share as it competes more aggressively with Nvidia amid soaring chip demand.
Tesla (TSLA): Banking on autonomous technology and robotaxi services to anchor its next phase of growth.
Apple (AAPL): Expected to shape consumer-facing AI through its hardware ecosystem and tightly integrated software.
Meta (META): Early AI investment now feeding into monetisation efforts across products and advertising.
Alphabet (GOOG): Gemini and in-house silicon give it a central role in the AI race alongside leading chip suppliers.
CrowdStrike (CRWD): Security platform built on AI capabilities that enterprises rely on for threat defence.
Palo Alto Networks (PANW): Integrates AI across its security suite, a strategy aimed at accelerating long-term expansion.
Absent from the top tier are Amazon, Salesforce, IBM and Intel.
Ives does not dismiss their prospects, placing them instead in a broader set of 30 companies likely to benefit from the AI wave.
He suggests they lack structural leverage that could define the sector. Their roles, he said, may be supportive rather than revolutionary.
Why the cycle may run for years
Ives expects global AI-linked capital expenditure to reach $550–600 billion by 2026, with further spending momentum from public systems and enterprise technology.
With less than 5% of US businesses meaningfully using AI, he argues the market is early rather than overheated. The analogy he offers is simple: the party has only just begun.
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