Workflow
Veteran analyst resets Big Tech ‘buy’ list for rest of 2025
Yahoo Finance·2025-10-19 19:13

Core Viewpoint - The AI trade continues to show strong momentum, defying concerns about a potential bubble, with significant contributions to market gains and earnings growth from major tech companies [1][2][6]. Market Performance - The S&P 500 has increased nearly 13% in 2025, with AI-driven tech giants contributing approximately 80% of these gains, particularly Nvidia, Microsoft, and Alphabet [2]. - 30 AI stocks have collectively added close to $5 trillion to U.S. household wealth over the past year, indicating a substantial wealth effect [2]. Earnings Growth - FactSet projects an impressive 11% EPS growth for the S&P in 2025, with Q3 tracking between 8% to 9%, driven by the "Magnificent 7" which achieved 27% EPS growth in Q2, all exceeding estimates [3]. - Nvidia is highlighted as a key contributor to Q3 earnings growth, reinforcing the notion that AI is translating into tangible financial results [3]. Market Concentration - There is a notable concentration of profits among a few companies, with expectations that Nvidia may soon represent a double-digit percentage of the S&P 500, reflecting real capital expenditures rather than speculative bubbles [4]. - Goldman Sachs and Citi anticipate that AI exposure will expand across nearly 50% of the S&P 500 index [4]. Analyst Insights - Veteran tech analyst Dan Ives believes the AI momentum will persist, recently updating his "buy" list for Big Tech, including Apple, Tesla, and Salesforce, as he sees potential for further upside [5][6]. - Ives compares the current moment to 1996, suggesting a significant industrial-scale transformation in digital infrastructure is underway, despite global tensions and valuation concerns [7]. - The focus should remain on AI demand, use cases, and supply-chain feedback, which support the sustainability of the trend, with expectations for tech stocks to rise another 10% or more as the AI Revolution progresses [7][8].