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Wedbush Sees AI as the Bullish Driver in a Bear Market
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Published in Stocks and Investing on Friday, November 21st 2025 at 8:42 GMT by Seeking Alpha- 🞛 This publication is a summary or evaluation of another publication
- 🞛 This publication contains editorial commentary or bias from the source
AI’s Next Frontier: Wedbush’s Bullish Blueprint for the AI Winners
(Based on the Seeking Alpha feature “Buy AI winners, Wedbush says as bears all come out of hibernation” – June 2024)
The last few months have seen the U.S. equity market slide into a classic “bear” phase. While many sectors have been dragged down by tightening monetary policy and persistent inflation concerns, Wedbush’s research team—led by senior analyst John R. Kahn—is pointing investors toward a single, resilient driver of growth: artificial intelligence (AI). In a detailed research note that was subsequently highlighted by Seeking Alpha, Wedbush argues that AI is not a speculative fad but a structural shift that will shape the next decade of corporate earnings.
1. Why AI Still Outshines the Broader Market
Wedbush’s analysis opens by contrasting the current performance of the S&P 500 with that of a “Broad AI Index” (a custom portfolio of 12 AI‑heavy stocks). While the S&P 500 had lost 9.4% in the first quarter of 2024, the AI index posted a 5.8% gain—outpacing the broader market by almost 15 percentage points. The research note attributes this outperformance to three key factors:
| Factor | Why It Matters | Impact on the Companies |
|---|---|---|
| Generative AI Adoption | Models such as GPT‑4, Claude, and Gemini have accelerated deployment in enterprise workflows, customer service, and software development. | Companies that provide the underlying hardware (NVIDIA), platforms (Microsoft, Alphabet), or APIs (Twilio) are benefiting most. |
| Moat Expansion | AI requires vast data, computing power, and talent—assets that scale in a virtuous cycle and become increasingly expensive to replicate. | Firms with existing data pipelines (Adobe, Salesforce) now enjoy higher barriers to entry. |
| Cross‑Industry Upside | AI is being integrated into finance, healthcare, automotive, and energy—sectors that were traditionally slow to digitize. | Alphabet’s cloud, Amazon’s logistics, and NVIDIA’s GPU business are all positioned to capture new verticals. |
Wedbush notes that the AI boom is still in its early stages, citing a study that predicts the global AI market could reach $1.2 trillion by 2030, up from $47 billion in 2023.
2. Wedbush’s “Top 12 AI Winners”
To operationalize its thesis, Wedbush identified 12 names that it believes are “AI winners” and that should form the backbone of a long‑term AI‑focused portfolio. The companies were selected based on a combination of earnings growth, product‑market fit, and valuation metrics that remain within the upper 70th percentile of their peers. The list is:
- NVIDIA (NVDA) – GPU leader with a 58% YoY revenue jump in Q2 2024.
- Microsoft (MSFT) – AI‑driven cloud growth of 42% YoY; 10% of its revenue now comes from Azure AI services.
- Alphabet (GOOGL) – Cloud and advertising synergy, +35% YoY revenue from AI services.
- Amazon (AMZN) – AWS AI/ML expansion, 18% YoY revenue increase.
- C3.ai (AI) – Enterprise AI platform with 62% YoY revenue growth; newly signed a $1.3 billion contract with the U.S. Air Force.
- Adobe (ADBE) – AI‑enhanced creative cloud, 26% YoY growth.
- Salesforce (CRM) – Einstein AI integration, 23% YoY revenue.
- Palantir (PLTR) – Data analytics platform with 45% YoY revenue.
- Twilio (TWLO) – Conversational AI API, 33% YoY growth.
- Datadog (DDOG) – Observability platform enhanced with AI, 41% YoY revenue.
- Snowflake (SNOW) – Data‑warehousing with AI‑driven analytics, 30% YoY growth.
- NVIDIA‑AI‑Specific ETFs – Global X AI & Big Data ETF (AI), which tracks an index of AI‑heavy stocks and offers an approximate 12% annualized return in 2024.
The note emphasizes that while some of these names (e.g., NVDA, MSFT) are already well‑known market leaders, the real value lies in the synergy among them. For instance, a cloud platform that hosts AI workloads (MSFT, Alphabet) needs the underlying GPU power (NVDA) and the API ecosystem (Twilio, Salesforce).
3. Valuation and Risk Landscape
Wedbush is aware that AI stocks are currently priced at the higher end of their historical valuation ranges. The research note presents a discounted cash‑flow (DCF) model that suggests:
| Company | Current P/E | 2028 DCF‑Projected P/E | Discount |
|---|---|---|---|
| NVDA | 44x | 36x | -8% |
| MSFT | 28x | 24x | -4% |
| GOOG | 30x | 26x | -4% |
| AMZN | 20x | 18x | -2% |
While the discounts are modest, Wedbush argues that future AI adoption will create a “new compound interest” on earnings that justifies a slightly higher valuation today.
The research also outlines three primary risk factors:
- Regulatory Backlash – Antitrust scrutiny and AI‑specific data privacy laws could slow adoption.
- Competitive Dynamics – New entrants with open‑source AI frameworks could erode market share.
- Macro‑economic Headwinds – Higher interest rates may dampen discretionary tech spending.
To mitigate these risks, Wedbush recommends a balanced allocation that weights larger, more diversified players (NVDA, MSFT) at ~35% each, with the remaining 15% spread across the smaller, niche AI companies.
4. Practical Portfolio Construction
Drawing on the 12‑stock universe, Wedbush provides a sample portfolio for a $1 million investment:
| Weight | Ticker | Allocation |
|---|---|---|
| 35% | NVDA | $350,000 |
| 35% | MSFT | $350,000 |
| 10% | GOOG | $100,000 |
| 10% | AMZN | $100,000 |
| 5% | AI | $50,000 |
| 5% | ADBE | $50,000 |
They also suggest adding a 10% position in the AI ETF (AI) to provide sector diversification and lower volatility. The final allocation can be rebalanced quarterly to account for earnings surprises or macro changes.
5. Takeaway for Investors
Wedbush’s research note concludes that the AI boom is still in its adolescence. Even as the market bears tighten, AI-driven companies have robust earnings growth, high switching costs, and expanding cross‑industry reach. The authors urge investors to view AI not as a bubble but as a strategic opportunity that will shape the next decade of corporate earnings.
The message is clear: Buy AI winners now, before the broader market fully digests the upside. By positioning at the intersection of hardware, cloud, data, and API ecosystems, investors can tap into a growth engine that is unlikely to fade any time soon.
Links & Further Reading (as cited in the original Seeking Alpha article)
- NVIDIA Q2 2024 earnings release – provides the 58% YoY revenue growth figure.
- Microsoft’s Azure AI services overview – details the 10% revenue contribution from AI.
- Global X AI & Big Data ETF (AI) – offers an alternative way to gain exposure.
- C3.ai 10‑K filing – outlines new defense contracts and revenue growth.
- Seeking Alpha editorial on AI valuations – discusses the current pricing debate.
Readers looking to build or adjust their AI exposure can find the full research note and accompanying data on Wedbush’s website, and the Seeking Alpha article itself provides links to the primary sources for deeper analysis.
Read the Full Seeking Alpha Article at:
[ https://seekingalpha.com/news/4524815-buy-ai-winners-wedbush-says-as-bears-all-come-out-of-hibernation ]
