Wedbush tech strategist Dan Ives believes the artificial intelligence boom is still in its early stages, saying that the industry has gone through only about 10% to 15% of the AI revolution. Ives said the scale of investment in AI infrastructure makes it difficult for investors to bet against the technology, even as companies continue to work out how best to finance their spending.
“It’s an arms race playing out, and you cannot, in this arms race, just watch it from the stands. Because if you watch it from the stands, you’ll essentially miss it. You’ll be using your VCR, essentially, or a typewriter,” he said during an interview with CNBC.
AI is spreading beyond the US-China race
According to Ives, the AI buildout is also becoming a global story rather than a competition limited to the US and China. The Middle East, Australia and parts of Europe are increasingly investing in AI infrastructure, expanding the reach of the technology.
He also pushed back against concerns that investors are overestimating the AI opportunity, saying those betting against technology companies may not yet be accounting for the potential effect of AI on future revenue and margins.
Financing concerns are not slowing the race
Ives also played down concerns around circular financing in the AI industry. He pointed to the involvement of major banks as a sign that financial markets are increasingly treating computing infrastructure as a valuable asset class.
“When you look at what the Godfather of AI, Jensen, and Nvidia are doing, there’s a supply-demand issue. Everyone recognizes that from the [tech] industry, and now from the financing perspective in terms of compute being an asset class, and it’s not stopping,” he said.
Companies are still trying to determine the right mix of equity and debt to fund their AI investments. Ives said some financing plans could nevertheless prove difficult for investors to absorb, citing Oracle as an example of a company whose plans to raise debt may not be easily digested by the market.
AI demand is already outpacing supply
The growing investment comes as demand for AI infrastructure continues to surge. Ives said enterprises are increasingly competing for access to data centres and GPUs as more industries find practical uses for the technology.
“Demand to supply, we estimate, is 13-14 to one for chips. The reality is, everyone is lining up when it comes to enterprises; you have to get your space in line relative to the data centers and GPUs,” he told CNBC.
He said companies including Microsoft, Cisco Systems and IBM are seeing this shift across their businesses, with Microsoft standing out in particular. According to Ives, the company’s latest earnings showed that enterprises are continuing to increase their commitment to AI.
The focus is shifting from spending to returns
Ives said recent earnings from major hyperscalers, along with AI-focused cloud providers such as CoreWeave and Nebius, have provided an important signal that the industry is moving beyond simply spending money on AI and towards generating returns from it.
He called this transition from capital expenditure to monetization as a key inflection point for the technology. “That was the validated sign investors needed to see, not just in capex, but in terms of enterprises starting to monetize going into now the second, third, and fourth-order derivatives,” he added.
Ives said the economic impact of AI could extend well beyond the companies directly building the technology. He estimated that every $1 of capital expenditure could generate a $5-$6 revenue multiplier across the broader technology industry, as more businesses adopt AI and build products and services around it.