Dan Ives of Wedbush Securities has a specific name for what is happening to tech stocks right now. In a note published June 26, he called it a “Twilight Zone market,” Seeking Alpha reported, and the phrase is more specific than it sounds.
Microsoft (MSFT), Nvidia (NVDA), Meta Platforms (META), and Palantir (PLTR) have all sold off sharply in recent weeks. At the same time, Micron Technology (MU), which supplies memory chips to the AI infrastructure those same companies are building, just reported blowout earnings and hit fresh highs.
Ives thinks investors have run out of patience at a specific moment in a much longer cycle. The AI story, in his reading, is still intact.
Why Dan Ives is calling this a “Twilight Zone” for tech stocks
Wedbush’s note traced the disconnect to two specific concerns, Benzinga reported. The first is the lag between Big Tech’s massive capital spending and any visible payoff in revenue. Microsoft and Meta, in particular, are in a six- to 12-month window where data center and compute buildouts are scaling up, but the monetization wave investors are waiting for has not yet arrived.
Ives put it directly in the note. “We are in an ‘air pocket stage’ right now where the $700 billion of Big Tech cap-ex this year is fueling the AI buildout… and tech investors are growing increasingly frustrated by the patience needed around Microsoft and Meta in particular seeing the fruits of their labor,” Benzinga reported.
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The second concern is rising compute and memory costs and whether they could force enterprises to slow their AI buildouts.
Apple (AAPL) announced price increases the day before the Wedbush note landed, sending a negative jolt through the market and feeding wider worries about whether neoclouds and hyperscalers are caught in a spending cycle without adequate pricing power to match it.
Wedbush expects those cost pressures to ease as supply catches up. But it acknowledges that the timing creates short-term pain for the companies absorbing the bills right now.
What Wedbush sees as the buying opportunity in tech and AI stocks
Ives framed the current situation as year three of a 10-year AI buildout and compared it to the construction of the Las Vegas Strip in the 1950s, when enormous capital went in long before the economic returns became visible.
Wedbush’s view is that the AI cycle is at the same inflection point. Investors who sold hotels in 1955 because the returns had not yet materialized were early, not right.
Microsoft and Meta, he said, are being treated “like they are bear market names that cannot be owned,” even though both sit at the center of what he calls the Fourth Industrial Revolution. Wedbush suggested that once AI consumer hardware, physical AI deployment, and enterprise use cases scale up, the anxiety investors feel now will look like a buying window in retrospect.
While Microsoft and Meta absorb selling pressure, Micron is having a very different week. Ives singled out Micron as a stock benefiting directly from the same AI buildout that is producing frustration among hyperscaler investors.
Memory chip suppliers are getting paid now. The hyperscalers are getting paid later.
M.Santiago/Getty Images
The $700 billion AI capex figure behind Wedbush’s bullish tech call
Wedbush estimates the largest technology companies will spend approximately $700 billion on capital expenditure this year to build out AI infrastructure. Ives uses this figure to argue the trade is still alive, regardless of week-to-week stock moves.
Committed spending of $700 billion does not stop because Microsoft’s stock is down or because investors are frustrated waiting for returns. Wedbush says that spending eventually shows up in revenue for the companies funding it.
Wedbush also says the stocks most exposed to that outcome are the ones to own right now. The firm’s favored names span the AI stack: Microsoft, Nvidia, Alphabet (GOOGL), Apple, Meta, Palantir, Salesforce (CRM), CrowdStrike (CRWD), and Palo Alto Networks (PANW), among others.
The common thread is either building AI infrastructure or monetizing it at scale.
Wedbush says AI bubble fears are misreading tech stock sell-off
Wedbush addressed the “AI bubble” concern directly. Ives said the market is in year three of a ten-year buildout. A bubble forms when prices run ahead of fundamentals.
Ives’s argument is that the fundamentals are still catching up, and the AI infrastructure spending is the mechanism producing them. Enterprise adoption is still early. Most companies have not yet fully committed to their AI strategies. The spending cycle, Wedbush argues, has significant runway still ahead of it.
The disconnect Ives described, hyperscalers selling off while their suppliers rally, makes sense inside that framing. Companies absorbing massive capex are being priced for near-term pain. Companies collecting revenue from that capex are being priced for near-term reward. Wedbush’s bet is that the pain side is temporary.
The firm described the “head-scratching moves across the sector” as disconnects and buying opportunities, not a breakdown in the AI trade. Ives has been saying versions of this all year.
The June 26 note is the same argument, delivered at a moment when more investors seem to doubt it.
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