This week’s “Software Armageddon” is nothing more than a “garage sale” for tech stocks, according to Wedbush analyst and AI bull Dan Ives.
Software stocks have plunged this week amid investor panic over the threat of AI disruption, but Ives said in an industry note Wednesday that the decline is not an industry-wide disaster but an opportunity to buy typically high-value stocks at a discount.
Ives’ bullish stance is nothing new. For years, he has urged investors to lean into technology stocks lower, as skeptics warn that enthusiasm for AI risks obscuring tougher questions about revenue growth, competition and the pace of company adoption.
This week’s sharp selloff (the worst decline since the Emancipation Day market crash) reignited those concerns and highlighted the risk that some AI stocks may struggle to justify their lofty expectations.
“While we believe the market is painting a doomsday scenario for software companies in the short term, we believe this is a huge exaggeration, as many customers will not be willing to risk their data to take advantage of AI implementation strategies until migration projects are de-risked,” Ives and his fellow analysts wrote.
He added: “Will AI be a headwind for software in the short term? Yes!… But the magnitude of this software crash is a major headache, and in our view is pricing in an Armageddon scenario for the sector that is far from reality.”
Here are five tech stocks that Ives and his colleagues recommend to buy now that they’re down.
Microsoft Corporation
With Wednesday’s closing price of $414.19, Microsoft is down more than 12% so far this year. Among the world’s largest software companies by market value, the company’s fortunes are increasingly tied to the growth of the Azure cloud and a multibillion-dollar partnership with OpenAI that has put AI tools like Copilot at the center of the company’s long-term strategy.
“We believe Microsoft is looking to accelerate the monetization of cloud and AI, which will become a larger part of Redmond going forward and ultimately drive growth and profitability in the years to come.”
Microsoft, which Ives predicts will be the “core winner” of the AI revolution, has a price target of $575.
Palantir Technologies Co., Ltd.
Palantir stock has fallen more than 16% since the beginning of the year, closing at $139.54 on Wednesday. The company sells data analytics and AI software to governments and large corporations, and last year it moved deeper into commercial markets, attracting new investor attention.
“As enterprises move from AI experimentation to production, Palantir’s value proposition becomes even more relevant, not less, as AI demand leads to new applications where speed of deployment and results-driven ROI are more important than model performance,” Ives wrote. “The value of Palantir is not in model performance, but in embedding AI into workflows with guardrails, approvals, and real-time feedback.”
With a price target of $230, Ives believes Palantir has a “golden path to becoming a $1 trillion market cap company.”
Snowflake Co., Ltd.
Snowflake had its sharpest decline this year, dropping more than 23% to close at $165.29 on Wednesday. The company, which provides cloud-based data storage and analytics tools for large enterprises, is facing pressure from investors as competition intensifies among companies positioning themselves as essential infrastructure for AI workloads.
“One of the misconceptions about this sale is that enterprises are bypassing software platforms and connecting frontier models directly in their data, but enterprises need security, access control, lineage, and governance before AI can interact/connect with production systems,” Ives wrote. “This positions SNOW as a trusted layer between enterprise data and external models like Anthropic, further strengthening SNOW’s position as an AI winner going forward.”
Ives expects Snowflake to outperform and has a price target of $270.
Salesforce Co., Ltd.
Salesforce is down more than 21% since the beginning of the year, closing at $199.44 on Wednesday. Salesforce, best known for its customer relationship management software, has worked to reignite growth by overlaying agent and generative AI tools on top of its core product, while weathering a downturn in enterprise IT spending.
“Despite our company being in the epicenter of the software crash, we believe CRM remains a long-term winner of the AI revolution because we believe the market is missing important details about Salesforce’s differentiated position against negative overhang,” Ives wrote. “As Agentforce strategies continue to ride the wave in the installed base, we believe CRM remains well-positioned to be an AI winner with a strong pipeline to leverage.”
Ives’ $375 price target reflects his belief that there is a “huge” market opportunity.
CrowdStrike Holdings Co., Ltd.
With Wednesday’s closing price of $415.36, CrowdStrike is down more than 8% since the beginning of the year. CrowdStrike is a leading cloud-native cybersecurity company, a business that continues to gain traction as enterprises combat growing cyber threats related to AI and cloud adoption.
“While CrowdStrike’s role is industry agnostic in the sense that AI is disrupting the entire competitive arena, the need to protect workloads and operations from AI remains essential, especially as usage increases significantly,” Ives wrote. “Even in the face of this software Armageddon, we believe CRWD’s position as the gold standard in cybersecurity remains steadfast.”
Ives set a price target of $600.
