The big bet on AI: Dan Ives explains why we are only at the beginning of the transformation

When will the rush for AI investments end? According to Dan Ives, a prominent analyst at Wedbush, the answer is disappointingly simple: it hasn’t even truly begun. The massive investments we’re seeing today are just the first chapter of a technological revolution that will redefine the global economy and society.

“Over the next two years, companies and governments will spend more on AI than they have in the past ten years combined,” Ives states. Gartner estimates that global spending on AI infrastructure, software, hardware, and services will reach $2 trillion by 2026. This is not bubble enthusiasm – it’s a real migration to the cloud, national AI initiatives, semiconductor manufacturing, and enterprise software updates.

AI is not Web 1.0 2.0

The difference between the current AI boom and the late '90s internet bubble is fundamental. Back then, capital flowed into abstract ideas and optimistic forecasts. Today, money funds tangible infrastructure: data centers, chips, software actually in use. Ives puts it this way: “We are closer to 1996 than to 1999” – suggesting that the race is still in its early stages, contrary to those talking about an imminent peak.

American numbers confirm this view. According to The Kobeissi Letter, 63% of recent US economic growth is attributable to AI-related spending. Without these investments, the economy would be significantly weaker. This transforms AI from the virtual second industrial revolution (as some described) into a tangible fourth industrial revolution already underway.

Hidden winners beyond the usual names

While everyone’s eyes are on NVIDIA, Microsoft, Amazon, Google, and Palantir, Ives identifies undervalued opportunities in the less spotlighted corners of the sector.

Cybersecurity as a strategic weapon: As AI intensifies both cyber threats and defenses, companies like CrowdStrike, Zscaler, and Palo Alto Networks are preparing for unprecedented expansion. Wedbush has set a price target of $600 for CrowdStrike (from the current price of $509), highlighting growth potential. With $150 billion of corporate assets vulnerable to AI-related threats, demand for advanced security solutions will explode.

Invisible infrastructure: Vertiv and Akamai power the data centers that make all this possible – crucial suppliers rarely mentioned in headlines.

Palantir: from outsider to legend: When Ives started covering Palantir at $25 in July 2023, the stock was trading around $16. Today, it’s around $180. This is not luck – it’s the ability to recognize a strategic shift that Wall Street had ignored. Palantir, a historic government contractor, was quietly transforming into an enterprise software powerhouse, just as AI accelerated demand for such platforms.

Geopolitics rewrites the rules

The US and China are turning AI into a geopolitical battleground. President Trump recently authorized NVIDIA to supply its H200 chips to selected Chinese customers, maintaining a significant share for American defense. This decision reveals the dual value – economic and strategic – of AI hardware.

The semiconductor supply chain, dominated by TSMC, ASML, and Intel, remains the bottleneck. The demand for AI computing continues to push production capacity to its limits, making these players as important as the software companies supporting them.

The lesson of Dan Ives

Over a quarter-century, Ives has traveled over 3 million miles visiting data centers and meeting tech industry leaders. He doesn’t evaluate demand from spreadsheets – he values it from the ground. And what he sees is a transformative force still in its early stages, with an adoption curve that will continue to accelerate in the coming years. The true winners will not only be the already known giants but also the “second, third, and fourth derivative” companies enabling the infrastructure and protection of this new economic era.