“We believe tech stocks will be up 25% in 2024,” Ives wrote in a Monday note, adding that “the Street and tech world await ‘the Year of AI.’” In a best-case scenario, Ives argued that tech stocks could even see a 35% gain in 2024, leading the Nasdaq Composite to a record 20,000. 

The key to the veteran analyst’s bullish view on tech stocks is based on one simple idea: AI use cases are “exploding globally.” Based on new surveys and his recent trips to tech companies around the world, Ives believes that his peers on Wall Street are still “significantly underestimating how quickly this AI monetization cycle is playing out.”

It’s all about growing ‘use cases’

There’s been a heated debate on Wall Street over the past few years over just how fast AI will affect the bottom line of major corporations. Some argue that the recent hype over AI’s ability to reduce costs and boost productivity for businesses, while in many ways justified, is a bit premature. It’s led to some “risky” stock purchases from inexperienced investors hoping to chase the trend, according to some veteran market watchers. Even Amazon CEO Andy Jassy said last summer that some of the latest AI tools are still part of the “hype cycle,” arguing they aren’t yet capable of producing meaningful results for businesses. Instead, Jassy said, Amazon is focused on next-generation AI tools from the “substance cycle.” 

But other more bullish experts, like the notably optimistic Ives, point to rising use cases for the technology as evidence that AI will begin to lift corporate earnings as soon as this year. “Use cases lead to the pot of gold at the end of the rainbow,” Ives wrote Monday—and there’s certainly a lot of AI use cases.

More than 50% of all enterprises believe there are 20 or more use cases for generative AI at their companies, while over 80% see 10 or more use cases, Wedbush found in a recent survey of major corporations. Ives argued that these survey results show that the benefits of using generative AI in everything from data analysis to marketing are “becoming increasingly clear” to businesses.

To his point, a recent Harris Poll survey commissioned by Insight Enterprises, a Fortune 500 tech company, found that 66% of business leaders say their companies are already using private generative AI tools.

“As we enter 2024, just about every business leader is fixated on how this technology can reinvent their operations and create new business models,” David McCurdy, chief enterprise architect and CTO at Insight, said of the data.

Ives believes that these surveys show an “AI spending tidal wave” is about to hit “the shores of the broader tech sector” next year as use cases for the technology continue to expand—and that means “the new tech bull market has now begun and tech stocks are set up for a strong 2024.”

Ives’s top AI-related stock picks for 2024

After Big Tech stocks led the party in 2023, soaring on the back of the prospect of interest rate cuts this year, Ives sees a much broader rally across the tech sector in 2024 as “AI tailwinds abound.”

How can investors navigate the AI boom? Sticking with AI-linked Big Tech giants while adding a few pure-play AI companies, cloud software specialists, and cybersecurity plays could be a winning combination, according to Ives.

“Our favorite tech names for 2024 are Apple, Microsoft, Google, Palo Alto, Palantir, Zscaler, CyberArk, CrowdStrike, and MongoDB,” he wrote Monday, arguing that these firms will benefit from AI use cases “multiplying across the enterprise and consumer landscape.”

Ives did warn that there may be “ebbs and flows” in tech stocks’ performance in the coming months owing to macroeconomic factors and fears over restrictive Fed policy, but in the end, it will be another standout year for any AI-focused enterprise.

“AI monetization has begun to positively impact the tech sector,” he wrote, arguing that it’s a revenue-boosting tech revolution that hasn’t been “seen since the start of the internet in 1995.”