The artificial intelligence sector experienced a significant rally on Thursday following the Federal Reserve’s decision to implement a jumbo 50 basis point interest rate cut. The tech-heavy Nasdaq 100 soared nearly 3%, while leading AI infrastructure companies saw even more dramatic gains. Nvidia, Broadcom, and ASML—all critical players in AI infrastructure—surged approximately 5% as investors embraced the risk-on environment.
Wedbush analyst Dan Ives attributed the AI stock surge directly to Fed Chairman Jerome Powell’s decisive action, calling the rate cut the “missing piece in the puzzle” that signals a “green light” for the tech growth trade heading into year-end and 2025. Ives emphasized that the Fed’s dovish dot plot projections extending into 2025 create a “very bullish backdrop for the Big Tech and AI Revolution.”
The analyst has been monitoring resilient earnings growth from the technology sector and anticipates further momentum as software companies begin monetizing AI in their customer offerings. The GPU buying frenzy continues unabated, with Ives estimating approximately $1 trillion in AI capital expenditure on the horizon over the next few years for the tech industry.
Following recent visits to Asia, Ives reported increased confidence that the tech supply chain is preparing for an unprecedented growth period driven by AI infrastructure demands. He colorfully noted that he believes “it’s only 9 pm in the AI party that will last until 4 am,” suggesting the AI boom has substantial room to run.
While Nvidia and Microsoft have dominated the AI trade thus far, Ives observed that the rally is broadening to include other tech stalwarts. Companies like Oracle, ServiceNow, Palantir, Salesforce, Dell, IBM, Apple, and AMD are increasingly participating in the AI revolution.
The convergence of three factors—a dovish Federal Reserve likely to deliver additional rate cuts, growing probability of a soft economic landing, and the ongoing surge in AI technology spending—creates substantial runway for continued AI stock appreciation. Ives drew a historical parallel, comparing the current moment to the 1995-1996 start of the Internet era rather than the 1999 tech bubble, suggesting sustainable growth rather than speculative excess.
Key Quotes
The Fed finally ripped the band-aid off and cut 50 bps with a dovish dot plot into 2025 and that we view as a very bullish backdrop for the Big Tech and AI Revolution risk-on trade into 2025.
Wedbush analyst Dan Ives explained how the Federal Reserve’s decisive rate cut creates favorable conditions for AI and technology stocks, signaling confidence in sustained growth through 2025.
Our time spent in Asia over the past few weeks gives us further confidence that the tech supply chain is gearing up for an unprecedented period of growth being driven by the roughly $1 trillion of AI capex we estimate is on the horizon the next few years for the tech world.
Ives shared insights from his Asia visits, revealing massive infrastructure preparation for AI growth and quantifying the enormous capital investment expected in the sector.
Now we are seeing many other tech stalwarts join the AI party including Oracle, ServiceNow, Palantir, Salesforce, Dell, IBM, Apple, AMD among others.
The analyst highlighted the broadening of AI stock participation beyond early leaders, indicating the revolution is expanding across the technology sector.
This ultimately speaks to our view this is a 1995 (almost 1996) start of the Internet Moment and not a 1999 Tech Bubble-like moment.
Ives drew a crucial historical distinction, comparing current AI growth to the sustainable early Internet era rather than the speculative bubble that followed, suggesting fundamentally sound valuations.
Our Take
The Fed’s rate cut catalyzing a 5% surge in AI infrastructure stocks reveals how monetary policy has become intertwined with technological transformation. What’s particularly noteworthy is the $1 trillion capex estimate—a figure that dwarfs previous technology buildouts and validates concerns about AI infrastructure constraints. The broadening participation beyond Nvidia suggests we’re entering a second phase of AI investment where application-layer companies demonstrate monetization, reducing concentration risk. Ives’s 1995 Internet comparison is astute but warrants caution—even sustainable revolutions experience corrections. The combination of lower rates, enterprise AI adoption acceleration, and supply chain preparation creates a powerful tailwind, but investors should monitor whether actual AI revenue growth justifies current valuations. The real test comes as software companies must prove they can convert AI features into measurable revenue growth.
Why This Matters
This development represents a critical inflection point for AI investment and industry growth. The Federal Reserve’s accommodative monetary policy directly impacts technology valuations, as lower interest rates make future cash flows from high-growth AI companies more attractive to investors. The $1 trillion AI capital expenditure forecast signals an infrastructure buildout comparable to major technological revolutions, creating opportunities across the entire AI ecosystem—from semiconductor manufacturers to software companies.
The broadening of AI stock participation beyond Nvidia and Microsoft indicates market maturation and suggests the AI revolution is moving from concentrated infrastructure investment to widespread enterprise adoption. This transition validates the technology’s commercial viability and sustainability. For businesses, the combination of favorable financing conditions and proven AI monetization pathways accelerates adoption timelines. The comparison to the 1995 Internet moment rather than the 1999 bubble is particularly significant, suggesting analysts view current valuations as justified by fundamental growth rather than speculation, which could sustain long-term investment and innovation in the AI sector.
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