Wedbush: NVIDIA and other AI stocks will benefit from the Fed rate cut
Investment bank Wedbush pointed out in a report that if the Federal Reserve cuts interest rates this week, tech stocks, especially companies in the artificial intelligence field like NVIDIA, will benefit. Analyst Daniel Ives stated that tech companies' spending on artificial intelligence is still in the early stages, with expected AI capital expenditures to reach $1 trillion in the coming years. The market generally expects the Federal Reserve to start an interest rate cut cycle, although there are differing opinions on the extent of the rate cut
According to the financial news app Zhitong Finance, investment bank Wedbush stated in an investor report that if the Federal Reserve cuts interest rates this week, a series of tech stocks may benefit, especially the hottest companies in the artificial intelligence field, such as NVIDIA (NVDA.US).
Wedbush analysts led by Daniel Ives stated: "In short, we believe that with the Federal Reserve and Powell starting the rate cut cycle this week, a soft landing on a macro level is still possible. Tech companies' spending on artificial intelligence is still in the early stages of the cycle. We believe that tech stocks are ready to rise by the end of the year and in 2025."
Daniel Ives pointed out that, in addition to NVIDIA, other tech companies related to artificial intelligence will also benefit from this rate cut, including Microsoft (MSFT.US), Oracle (ORCL.US), Palantir (PLTR.US), Salesforce (CRM.US), Dell Technologies (DELL.US), IBM (IBM.US), Apple (AAPL.US), AMD (AMD.US), and ServiceNow (NOW.US).
Daniel Ives stated that capital spending on artificial intelligence is expected to reach up to $1 trillion in the coming years. He added: "As more and more tech suppliers demonstrate the monetization of artificial intelligence, this will ultimately drive the next phase of the tech stock bull market in a very stable overall IT spending environment. We believe this is the bullish background for tech stocks."
The Federal Reserve will announce its September interest rate decision early Thursday Beijing time. The market generally expects it to start a rate cut cycle, but there is still a debate on whether it will be a 25 basis point cut or a 50 basis point cut. Currently, the market estimates a 61% probability of a 50 basis point rate cut by the Federal Reserve this week, higher than around 50% last Friday.
Although most traders expect a 50 basis point rate cut by the Federal Reserve, UBS analyst Paul Donovan believes that a rate cut exceeding 25 basis points seems unlikely, "Although the Federal Reserve is late in cutting rates, a larger rate cut may be seen as a signal of panic." "More frequent rate cuts seem most likely, rather than larger rate cuts."