The next stage of the AI revolution is just starting, says Wedbush's Dan Ives

Key Concepts

• AI-Driven Engineering: The application of artificial intelligence to accelerate and optimize engineering processes.
• NVIDIA: A leading technology company specializing in graphics processing units (GPUs) and AI hardware.
• Synopsis: A company providing electronic design automation (EDA) software and services for chip design.
• CUDA: A parallel computing platform and programming model developed by NVIDIA, enabling software to use NVIDIA GPUs for general-purpose processing.
• AI Arms Race: A competitive environment where companies are rapidly investing and developing AI technologies.
• Hyperscalers: Large cloud computing providers like Amazon Web Services (AWS), Microsoft Azure, and Google Cloud.
• Monetization of AI: The process of generating revenue from AI technologies and applications.
• Mag-7 Names: Refers to the seven largest technology companies in the NASDAQ index, often including Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta, and Tesla.
• Palantir: A software company specializing in big data analytics and artificial intelligence for government and enterprise clients.
• Enterprise Tiers: Refers to the business and corporate sector for AI applications.

Partnership and AI Acceleration

The core of the discussion revolves around a partnership aimed at significantly speeding up AI-driven engineering. This collaboration is expected to reduce workloads that previously took weeks down to mere hours. This development has had a positive impact on the stock market, with NVIDIA seeing a 1.5% increase and Synopsis gaining nearly 5%.

Tech Sector Outlook and AI Revolution

Dan Ives of Wedbush, who recently released his 2026 outlook, forecasts a 20% upside for the tech sector next year. He specifically defines the "tech sector" in this context to include the "Mag-7" names. Ives believes that big tech, particularly within the AI trade, could see gains of 20% to 25%. He emphasizes that the "AI revolution stocks" are poised for at least a 20% increase.

Ives asserts that the AI revolution is entering its next stage, with checks indicating that 20-25% of deals from hyperscalers have been accelerated in the last three to four weeks. He views this as the beginning of the monetization of the AI revolution, impacting software, cybersecurity, and infrastructure.

NVIDIA-Synopsis Deal Analysis

The partnership between NVIDIA and Synopsis is examined, with Synopsis set to use NVIDIA's CUDA platform, making them a paying customer. NVIDIA is investing $2 billion in Synopsis stock to secure this customer relationship.

Ives acknowledges that some might view this as a "red flag," reminiscent of vendor financing in the late 1990s. However, he frames it as part of an "AI arms race" where companies like NVIDIA, OpenAI, and AMD are staking their ground. His perspective is that for every dollar spent, they are getting back $8 to $10. While acknowledging potential short-term questions, he believes that looking out two to four years, these deals will solidify NVIDIA's position as the primary chip provider fueling the AI revolution. He expresses strong support for Jensen Huang's (NVIDIA's CEO) strategy.

Synopsis Stock Performance and Market Reaction

There is surprise expressed regarding Synopsis's stock performance following the announcement. Despite being an $80 billion company with a $2 billion investment from NVIDIA, the stock did not trade as strongly as anticipated. Ives notes that Oracle's stock also dipped after its association with OpenAI, suggesting a "too big to fail" perception might be at play. He reiterates his surprise at Synopsis's stock not trading higher, viewing it as an opportunity and a "second, third derivative of this AI revolution trade into '26."

Palantir and Enterprise AI

The discussion shifts to Palantir, a company Dan Ives has been bullish on, which has experienced a significant drop after its earnings report. Ives strongly advocates for doubling down on Palantir, even though it is currently considered expensive. He projects a $1 trillion market cap for Palantir within the next two to three years. His reasoning is that 20-30% of the trillions of dollars being spent on AI use cases will involve Palantir. He highlights that Palantir is operating in a different game, focusing on enterprise-tier AI use cases first, which he believes is not yet fully reflected in its stock price.

Synthesis/Conclusion

The overarching takeaway is that the AI revolution is in its nascent stages, with significant growth and monetization expected in the coming years. Partnerships like the one between NVIDIA and Synopsis are strategic moves to accelerate AI development and secure market positions. While some traditional financial concerns might arise, the long-term outlook for key AI players like NVIDIA and Palantir remains exceptionally strong, driven by massive investments and the expanding adoption of AI across various sectors, particularly in enterprise applications. The market's reaction to these developments, while sometimes nuanced, is ultimately seen as an opportunity for those with a long-term perspective.