Wall Street’s biggest optimist on technology companies said spending on artificial intelligence has risen over the past weeks even as the stock market has struggled, and that IBM has an enormous opportunity to benefit.
In a research note on Monday morning, Wedbush Securities’ managing director Daniel Ives estimated that AI spending now makes up roughly 12% of many IT budgets, and in some cases even 15%. The numbers, up from his estimate of 10% for January, were based on checks conducted over the past few weeks monitoring dozens of large companies.
Ives is a so-called perma bull, meaning he has shown unwavering faith in the U.S. tech companies and prospects for their stocks. His estimates stand out because tech stocks have gotten hammered, with the Nasdaq Composite index down past four of the five weeks, for a loss of 11%.
A rise in AI budgets could help to counter concerns that prices of tech stocks already reflect the potential gains from AI. The shares have fallen in response to those worries, as well as given the uncertainty over Trump administration policies such as tariffs.
“So far about 70% of customers we have spoken with heading down the AI path have accelerated their AI budget dollars and initiatives over the last six months, speaking to the sheer speed of this tech spending cycle,” he wrote. The companies Wedbush spoke with were in financial services, healthcare, transportation, and logistics, among other areas.
Palantir and Salesforce stocks remain the two best software plays for 2025, according to Ives. But he has now added IBM to the Wedbush Best Ideas List, reflecting greater confidence about the company.
“The clear standout over the last month from checks has been the cloud penetration success at IBM which has a massive opportunity to monetize its installed base over the next 12 to 18 months,” he wrote.
IBM’s stock has lost 6.7% in the past five weeks. It was up 1% in early trading on Monday.
J.P. Morgan’s Brian Essex is more cautious on the name. He reiterated his Neutral rating on the stock on Sunday, saying IBM could be affected by disruptions to procurement by the federal government as the Trump administration aggressively tries to save money. Federal spending accounts for less than 5% of IBM’s revenue, according to J.P. Morgan.
https://www.livemint.com/companies/news/ai-budgets-are-still-rising-ibm-has-a-massive-opportunity-11742826510872.html
