Tech Stocks to Climb 20%-25% in 2026, Says Dan Ives

Wedbush’s Top AI Stocks for 2026: A Detailed Analysis

Key Concepts:

• AI Inflection Point (2026): The year where the second, third, and fourth-order effects of AI modernization become fully realized.
• Second, Third, Fourth Derivatives: The cascading impacts of AI beyond initial implementation – impacting related industries and creating new applications.
• Physical AI: AI applications manifested in the physical world, specifically autonomous robotics and automation.
• AI Arms Race: The intense competition between major tech companies to dominate the AI landscape through investment, acquisition, and innovation.
• CapEx (Capital Expenditure): Funds used by a company to acquire, upgrade, and maintain physical assets such as property, plants, buildings, and equipment.
• Hyperscale: Refers to the massive data centers and computing infrastructure required to support large-scale cloud computing and AI applications.

I. The 2026 AI Inflection Point & Market Outlook

Dan Ives of Wedbush predicts 2026 will be a pivotal year for AI, marking a shift from initial adoption to the realization of broader, secondary impacts. He anticipates tech stocks will experience a 20-25% increase in 2026, driven not just by established tech giants, but by the ripple effects of AI across various sectors. This isn’t simply about growth; it’s about the “second, third, fourth derivatives playing out across its modernization.” Ives frames this as a bullish outlook, suggesting the current stage of AI development makes him more optimistic, not less. He highlights the importance of upcoming tech conferences, particularly the one where Tesla is expected to showcase advancements in autonomous robotics and automation.

II. Key Players & Competitive Landscape

The discussion centers around several key players:

• Nvidia: Dubbed the “Godfather of AI,” Nvidia is positioned as the current leader in AI technology, particularly in chip design. Even restricted versions of their H200 chips are in high demand from Chinese tech companies. Ives notes Nvidia is “4 to 5 years ahead of any other chip player.”
• Tesla: Identified as one of the two best “physical AI” plays alongside Nvidia, Tesla’s focus is shifting towards autonomous driving and robotics. Elon Musk is described as a “war time CEO” prioritizing AI development.
• Microsoft: Dominant in the enterprise space, Microsoft is seen as a “table pounder” with $25-30 billion in incremental modernization not fully reflected in its stock price. Nadella is positioned as the first call for companies implementing AI.
• Apple: Expected to finally participate fully in the consumer AI revolution, with a potential stock price target of $75-$200 per share.
• Google (Alphabet): Benefiting from a recent legal win against the DOJ antitrust case, Google is considered part of the “big tech” benefiting from the AI arms race.
• Chinese Tech (Alibaba, Tencent, Huawei, Baidu): While the US currently holds a tech lead (for the first time in 30 years, according to Ives), Chinese tech is rapidly developing, particularly in robotics and autonomy. Baidu’s chip unit IPO is noted as a significant event.

III. The AI Arms Race & Acquisition Activity

Ives characterizes the current environment as an “arms race” among big tech companies. Recent acquisitions by Meta and Nvidia are seen as indicative of this competition, driven by a desire to solidify competitive advantages and assess the true value of AI investments. He predicts increased acquisition activity, with companies spending up to $600 billion in CapEx. However, he also notes that other players like AMD, Cisco, and IBM are seeking to enter the AI space, not through acquisitions, but through organic growth.

IV. Emerging AI Applications & Trends

The discussion highlights several emerging AI applications:

• Humanoid Robotics: Expected to be a major focus at upcoming tech conferences.
• Autonomous Systems: Including self-driving cars and potentially flying cars.
• Embedded AI Devices: AI integrated into everyday consumer products, such as smart refrigerators ("opening the refrigerator and having it say, do you really want that?").
• AI in Healthcare: Mentioned in the context of potentially disrupting weight loss drugs like Ozempic.
• AI in Cybersecurity: Highlighted as a key area for investment, with Wedbush’s ETF focusing on the “AI 30” – 30 companies poised to benefit from AI.

V. US vs. China in the AI Landscape

While acknowledging China’s rapid advancements, Ives believes the US currently holds a technological lead, driven by companies like Nvidia, Microsoft, and Palantir. However, he remains bullish on Chinese tech, particularly in robotics and autonomy, and recommends investors consider both US and Chinese AI players. He describes the situation as a “narrowing” of the gap, rather than a complete overtaking.

VI. Investment Strategies & Wedbush’s ETF

Ives recommends focusing on US tech companies like Nvidia, AMD, Microsoft, and Apple. He also suggests considering Chinese tech players, but emphasizes the importance of playing the US tech market first. His firm’s ETF, the “AI 30,” focuses on 30 companies identified as winners in the AI space, including a selection of Chinese firms.

VII. Microsoft’s Enterprise Dominance

Microsoft is positioned as the dominant player in the enterprise AI space. When companies seek to implement AI solutions, the first call is to Microsoft’s Satya Nadella. The company’s incremental modernization is estimated at $25-30 billion, which Ives believes is undervalued by the market. He compares the current AI adoption phase to a party that is just getting started, with significant growth potential still ahead.

Conclusion:

The interview paints a highly optimistic picture of the AI landscape, particularly for 2026. Ives emphasizes the importance of understanding the cascading effects of AI beyond initial implementation and identifies key players poised to benefit from this revolution. He advocates for a diversified investment strategy, including both US and Chinese tech companies, and highlights the ongoing “arms race” driving innovation and acquisition activity. The overall message is that the AI revolution is still in its early stages, with significant growth potential remaining.