Wedbush Securities notes that with over 15% of cloud services now embedding AI models, tech spending is shifting toward smarter deployments that “drive the top line at lower costs,” even amid macro uncertainty.
The firm expects the major hyperscalers—Microsoft (MSFT, Financial), Alphabet (GOOG, Financial) and Amazon (AMZN, Financial)—to lead a surge in capital expenditures, forecasting $325 billion in cloud-and-AI capex for 2025, up 40% year-over-year. Analysts add that Meta's inclusion brings the total hyperscaler count to four, underscoring broad industry commitment to AI integration.
Palantir is singled out as a “strategic winner” thanks to its deep enterprise AI use cases, positioning it alongside cloud giants in capturing budget allocations for model-driven analytics and automation. Wedbush's team writes, “Software is now behind the velvet ropes and in the AI Party…use cases quickly play out on the enterprise front in 2025,” suggesting an inflection point for software valuations.
Why It Matters: Investors may see software names outperform peers as AI-driven cloud spending becomes a high-priority budget item.
Investors will eye Q2 earnings in July for fresh guidance on AI-and-cloud revenue traction.
