Dan Ives of Wedbush believes the AI revolution is only in its early stages, likening it to the “3rd inning of a 9-inning game.” This suggests a prolonged period of growth for key players in the AI ecosystem.
He highlights Nvidia as a dominant force, with record revenues and significant infrastructure expansion. The U.S. is expected to lead in high-value areas like AI models, software, and chips, with companies like Alphabet and Microsoft also showing strong performance in cloud and AI services. Even utilities like NextEra Energy are positioned to benefit from the massive energy demands of AI infrastructure.
Wedbush analyst Dan Ives shared a compelling perspective on the current state of the AI revolution during his appearance on The Pomp Podcast with Anthony Pompliano. Ives characterized the moment as being in the "3rd inning, 1 out in a 9-inning game," suggesting that the vast majority of growth and potential for AI-related investments is still ahead.
This outlook implies significant runway for growth in chip stocks, hyperscalers, and even the utility companies powering the infrastructure buildout. Ives argues that the U.S. is strategically positioned to capture value across the AI stack, encompassing "the models, the software, software and the chips." This is a stark contrast to previous "peak AI" calls, indicating that the current bull market in tech, driven by AI, is likely to be a multi-year phenomenon.
Nvidia: The Godfather of AI's Dominance
Nvidia, led by CEO Jensen Huang, whom Ives dubs the "godfather of AI," continues to demonstrate stellar financial performance. In Q1 FY27, the company reported revenue of $81.615 billion, an 85% increase year-over-year. The Data Center segment was a major driver, with revenue reaching $75.246 billion, up 92% year-over-year, and networking within this segment surged by 199%. Huang described this period as "the largest infrastructure expansion in human history."
Nvidia's commitment to its growth trajectory is evident in its capital allocation. The board approved an additional $80.0 billion in share repurchases and increased the quarterly dividend from $0.01 to $0.25 per share. Supply commitments now stand at an impressive $119.0 billion. Ives' competitive analysis suggests that even a "third-rate Nvidia chip is a year and a half, 2 years ahead of Huawei," highlighting the company's significant technological lead.
Nvidia's stock has seen a 62% increase over the past year and is up 15% year to date. Market sentiment, as reflected by Polymarket, suggests a 71.5% probability that NVDA will finish higher by May 26.
The Crucial Role of Software and Cloud Infrastructure
Beyond hardware, the software and cloud layers are critical to the AI ecosystem. Alphabet (NASDAQ:GOOGL) reported Q1 FY26 revenue of $109.90 billion, with its Google Cloud division growing at a robust 63% and its backlog nearly doubling to over $460 billion. Microsoft (NASDAQ:MSFT) announced its AI business is generating an annual run rate of $37 billion, a 123% year-over-year increase. Microsoft's commercial remaining performance obligation stands at $627 billion. Polymarket anticipates Microsoft will out-value OpenAI and Anthropic combined by the end of 2027 with a 70% probability.
AMD: A Strong Contender in the Chip Arena
Advanced Micro Devices (NASDAQ:AMD) stands out as a significant player challenging the notion that Nvidia has a complete monopoly in the chip market. In Q1 FY26, AMD's revenue reached $10.25 billion, with its Data Center segment growing by 57%. Meta has committed to deploying up to 6 GW of AMD Instinct GPUs, underscoring the demand for alternative solutions. AMD shares have surged 322% over the past year and 118% year to date. Ives' perspective suggests that the expanding AI market can support multiple successful chip vendors.
Utilities: An Indirect Play on AI Growth
One of Ives' less discussed but crucial points is the rise of utilities as a "derivative of AI." As data center power demand escalates, utilities are expected to see expanding multiples. NextEra Energy (NYSE:NEE) added 4 GW to its renewables backlog in Q1 and secured contracts for 9.5 GW of gas-fired generation under a U.S.-Japan trade agreement. The company is projecting an 8%+ EPS CAGR through 2032. NextEra Energy's stock has risen 36% over the past year.
Long-Term Patience: Avoiding Costly Mistakes
Ives draws a parallel between companies that resist AI and historical technological obsolescence, likening them to "typewriters" or "horses." Geopolitically, he believes that pragmatic relationships between global powers like the U.S. and China will prevent a complete decoupling, allowing for continued innovation and trade. While China leads in areas like robotics and power generation, the U.S. is poised to dominate the high-margin segments of models, software, and chips.
The overarching message from Ives' "third-inning" analogy is the need for patience. In the current AI landscape, selling successful investments too early is a significant risk. Furthermore, investors should look beyond the obvious AI hardware manufacturers to identify opportunities in power producers, networking suppliers, and secondary chip designers that are integral to the AI buildout. The extent to which an investor capitalizes on these opportunities will depend on their conviction in Ives' long-term AI thesis.
