Generative artificial intelligence is all the rage now but the AI boom is not just all hype, said Dan Ives from Wedbush Securities, who calls it the “fourth industrial revolution playing out.”
“This is something I call a 1995 moment, parallel with the internet. I do not believe that this is a hype cycle,” the managing director and senior equity research analyst told CNBC’s “Squawk Box Asia” on Wednesday.
The fourth industrial revolution refers to how technological advancements like artificial intelligence, autonomous vehicles and the internet of things are changing the way humans live, work and relate to one another.
“I think this is really transformational changes to technology that I think would change the tech space for the next 20-30 years,” said Ives. “I think we are just starting what we believe is the start of a new tech bull market, despite many of the bears continuing to really being skeptical.”
Adoption of AI technology surged after ChatGPT — OpenAI’s viral chatbot — went viral due to its ability to generate humanlike responses to users’ prompts, which amazed researchers and the general public.
“I think it really comes down to the guidance heard around the world with Nvidia’s $4 billion guidance range. I think that’s the tip of the iceberg,” he said.
U.S. chip maker Nvidia produces graphics chips for gaming and AI. Those chips help drive the technology behind ChatGPT and Alphabet‘s Bard chatbots.
Nvidia said it expects sales of about $11 billion in the second quarter — more than 50% higher than Wall Street’s $7.15 billion estimate, which Ives called a “jaw dropping guidance.”
Nvidia stunned investors and analysts by reporting better-than-expected first-quarter profit of more than $2 billion and revenue of $7 billion in May.
“We’re going to have a trillion dollars of incremental spend over the next decade. That could be conservative — that wasn’t here six months ago,” said Ives.
“That’s why I think what you’re seeing is the multiple expansion. Investors recognize this isn’t an AI gold rush, which I really view is something. The only parallel would be 1995 Internet and 2007 Apple iPhone moments in terms of what I’ve seen in my career,” said the analyst.