Wedbush says the tech thesis was unchanged after Investing.com’s September selloff

Investing.com — After the market reopened after the Labor Day weekend, technology stocks faced significant pressure in the broader risk-free market. However, analysts at Wedbush remain unfazed by the latest selloff, stressing that their “technology thesis remains unchanged.”

“While we acknowledge the lackluster macro/jobs data and the drumbeat for the US presidential election in November, we view this sell-off in tech stocks as a buying opportunity for our core winners in this AI revolution,” the analysts said Wedbush in a statement on Tuesday. note.

The investment firm highlighted last week’s Nvidia (NASDAQ: ) earnings and conference call as a key moment in strengthening the AI ​​bull case.

While the immediate reaction to Nvidia’s strong results and guidance has been subdued, they believe that demand for AI far outstrips supply. With concerns over Blackwell’s delays, analysts see no major obstacles to continued growth in the AI ​​sector towards the end of the year, despite some recession concerns.

“The stage is set for tech stocks to move higher at the end of the year and into 2025, in our view,” the analysts wrote, as they expect the Federal Reserve to start cutting rates, the economy to experience a soft landing and AI spending to boost. a long-term generational shift in technology investment.

Wedbush continues to estimate that for every dollar spent on an Nvidia GPU chip, there is an $8-10 multiplier in the tech sector, reinforcing their bullish stance on tech stocks for the year ahead.

“Taking a step back, Nvidia has changed the technology and global landscape as its GPUs have become the new oil and gold in the IT landscape, its chips powering the AI ​​Revolution and being the only game in town for now,” Wedbush’s team continued .

Nvidia shares fell 9.5 percent on Tuesday, marking the biggest one-day loss in market value for a U.S. company and wiping out a market capitalization of $279 billion, as investor enthusiasm for artificial intelligence cooled amid weak economic data and a broad market selloff.

The broader PHLX Semiconductor Sector chip index also fell 7.75%, its biggest drop in 2020.