The Nasdaq Composite, known for its tech-heavy focus, has experienced limited gains recently, with only two positive trading days in August. However, Wedbush analyst Daniel Ives remains optimistic and predicts a significant bounce in the near future.
Despite a small gain on Thursday, the Nasdaq closed below its 50-day moving average for the first time since mid-March. The index has seen a decline of 4.6% this month, partly due to the impact of rising treasury yields. Disappointing earnings reports from major tech players like Apple, Palantir Technologies, and Datadog have also contributed to the downward pressure. It's worth noting that historically, August has been the second-worst month for the Nasdaq.
In a note on Friday, Ives reassured investors that any pullback would likely be short-lived. He maintains his bullish stance on tech stocks, predicting a potential boost of 12% to 15% in the second half of the year. Moreover, he believes the tech market will continue to thrive for the next 12 to 18 months.
Ives has long been a tech bull and made bold predictions, including Apple reaching a market capitalization of $4 trillion by 2025. Currently sitting at $2.8 trillion, Apple has shown remarkable growth.
The analyst's optimism about the Nasdaq is rooted in his belief that the growth of artificial intelligence (AI) is not just a passing trend. He anticipates that companies will increasingly invest in AI tools, allocating approximately $800 billion to this area over the next decade. Drawing a comparison to the internet boom in 1995, Ives highlights the monumental potential for this AI buildout.
In terms of stock picks, Ives favors Nvidia, a leader in semiconductor technology for AI applications. He rates Nvidia's stock as Outperform with a target price of $490. Additionally, he recommends Microsoft, which has invested in OpenAI, the developer behind the AI sensation ChatGPT. For Microsoft, Ives has an Outperform rating and a target price of $400. Apple, with its ambition to create an AI-driven app store, also receives an Outperform rating from Ives, accompanied by a target price of $230.
It's important to note that the opinions expressed by Ives are his own and may not reflect broader market sentiment or future performance.