Key Takeaways:
Dan Ives of Yorkville Ives & Company says the AI stock rout is a buying opportunity, not the start of a structural downturn.
The sell-off in artificial intelligence stocks is a temporary "gut check" for investors rather than a warning sign of a bubble bursting, according to Dan Ives, managing director at Yorkville Ives & Company.
"We're still in the early innings of this AI trade. What we're seeing is a digestion period, not a structural unwind," Ives said in an interview Thursday.
The iShares Semiconductor ETF (SOXX) has fallen roughly 9% from its July high to $521.87, while the Nasdaq 100 (QQQ) dropped 1.3% to $696.77 on Thursday alone. The sell-off has been broad, with chip stocks bearing the brunt of the decline.
Ives pointed to three pillars supporting his bullish outlook: enterprise AI demand remains strong, Big Tech capital expenditure plans are intact, and cloud revenue growth continues to accelerate. The question for investors, he said, is whether to rotate into defensive sectors or buy the dip in quality AI names.
Ives's conviction rests on what he calls the "monetization phase" of AI — the transition from infrastructure buildout to revenue generation. Hyperscalers including Microsoft Corp., Amazon.com Inc., and Alphabet Inc. have committed more than $200 billion in combined capital spending for 2026, with the majority directed at AI data centers and GPU clusters. Those spending plans have not been revised downward despite the recent equity sell-off, Ives noted.
Enterprise Demand Remains the Backbone
The enterprise adoption cycle, Ives argued, is where the real opportunity lies. Corporate spending on AI tools and services is projected to reach $150 billion this year, up from $85 billion in 2025, according to industry estimates. Companies across financial services, healthcare, and manufacturing are deploying generative AI for customer service, drug discovery, and supply chain optimization — use cases that require ongoing compute capacity rather than one-time model training.
"Enterprise AI is not a discretionary line item anymore. It's becoming as essential as cloud storage was a decade ago," Ives said.
The bull case is not without risks. The sell-off was triggered in part by concerns that AI infrastructure spending has outpaced actual revenue generation, a dynamic that echoes the dot-com era. Taiwan Semiconductor Manufacturing Co., whose strong second-quarter guidance initially buoyed sentiment, has seen its stock decline alongside the broader semiconductor sector.
What Could Change Ives's Outlook
Ives identified two scenarios that would force him to reconsider his bullish stance: a meaningful reduction in hyperscaler capital expenditure guidance during upcoming earnings calls, or a sustained deterioration in cloud revenue growth. Neither has materialized, he said.
For investors weighing their next move, Ives recommended focusing on companies with direct exposure to AI infrastructure spending — chipmakers, cloud providers, and data center operators — rather than speculative AI startups. "This is a time to be selective, not fearful," he said.
The SOXX ETF, which tracks 30 semiconductor companies, now trades at roughly 22 times forward earnings, below its five-year average of 26 times, according to data compiled by Bloomberg. That valuation compression, Ives argued, creates an entry point for long-term investors.
This article is for informational purposes only and does not constitute investment advice.
