AI and Software Stocks Poised for Major Gains in 2025, Wedbush Predicts
Technology stocks are expected to surge by 25% in 2025 as the new U.S. administration implements a more relaxed regulatory approach, according to analysts at Wedbush. The firm believes the ongoing AI revolution will create a wave of winners, with Nvidia Corporation (NVDA +0.63%) leading the charge.
In a note to clients on Tuesday, Wedbush analyst Dan Ives highlighted that software companies are finally beginning to join the AI-driven market rally.
“The time has come for the broader software sector to fully embrace the AI revolution. We are witnessing an explosion of use cases, and the enterprise adoption phase is set to accelerate starting in 2025. With large language models (LLMs) launching across the industry and generative AI adoption gaining traction, this marks a pivotal moment in the Fourth Industrial Revolution—one that will significantly benefit the tech sector and its key players.” — Dan Ives, Wedbush
Top Software Stocks Positioned for AI Growth
Among the biggest beneficiaries in software, Wedbush continues to favor Palantir Technologies (PLTR -5.17%) and Salesforce (CRM -1.88%) as the two top AI-driven plays. However, other software companies are also well-positioned to capitalize on this trend.
The report highlights six key software names expected to thrive in the AI era, including:
- MongoDB (MDB -1.69%)
- Pegasystems (PEGA -3.17%)
- Snowflake (SNOW -0.86%)
“The AI Software era is now here,” Ives wrote, underscoring that software is entering a new phase of AI-driven innovation and enterprise adoption.
Nvidia and Cloud Giants Remain AI Powerhouses
Nvidia (NVDA +0.63%) continues to dominate the AI hardware space, with its GPUs regarded as essential for AI workloads. Wedbush emphasizes that Nvidia’s leadership, under CEO Jensen Huang, has been instrumental in kickstarting the $2 trillion+ AI investment wave.
“The AI boom began with the ‘Godfather of AI,’ Jensen Huang, and Nvidia remains the only game in town. Their chips have become the new gold and oil of the technology sector,” Ives noted.
Beyond Nvidia, major cloud and hyperscale companies are also poised to drive the next phase of AI innovation. Microsoft (MSFT +0.53%), Google Cloud (GOOGL -0.38%), and Amazon Web Services (AMZN -1.65%) are all expected to see strong momentum in AI and cloud computing in the years ahead.
Policy and Market Challenges Ahead
Wedbush predicts that a Trump-led White House would take a more lenient stance on tech regulation compared to the Federal Trade Commission (FTC) under Lina Khan, who has actively blocked mergers and sought to curb Big Tech’s influence.
However, Ives acknowledges that the tech sector still faces significant challenges, including:
- Potential tariffs on imported goods under Trump’s policies
- Uncertainty around the Federal Reserve’s approach to interest rates
- High stock valuations that could lead to volatility
Despite these risks, Ives remains bullish on the long-term investment potential of AI and technology stocks.
“These moments of uncertainty will create opportunities to invest in the dominant tech names—a strategy that has been at the core of our investment playbook for the past two years.”
Nvidia’s Market Dominance
Nvidia’s stock has skyrocketed 177% in 2024, vastly outperforming the broader market. By comparison, the S&P 500 (SPX -0.43%) has posted a 24% gain year-to-date.
With AI adoption accelerating across industries, Wedbush expects Nvidia, software leaders, and cloud giants to remain the driving forces of the next stage in technology’s evolution.