Wall Street analyst Dan Ives says AI revolution is only in 'third inning', validating multi-year capex runways.
Dan Ives, Global Head of Technology Research at Wedbush Securities and founder of Yorkville Labs, continues to argue that the AI cycle is in its infancy. On The Pomp Podcast, he reframed the timeline: "Those that say it's seventh, eighth, you haven't. It's Vegas 1955. You're just building the Strip." His "third inning" characterization reflects a deliberate call to move past capex debates and geopolitical narratives, instead following what he terms "the breadcrumbs" of demand signals across chips, memory, hyperscalers, and enterprise software. He told listeners he expects monetization proof points to emerge in the second half of the year, and said he is "much more confident that this is truly the fourth industrial revolution today than maybe a year and a half ago."
NVIDIA remains the purest expression of this thesis. Q1 FY27 revenue reached $81.61B, up 85.2% year over year, with data center revenue of $75.25B and networking up 199%. Non-GAAP EPS came in at $1.87, and management guided Q2 to $91.0B. CEO Jensen Huang described "the buildout of AI factories, the largest infrastructure expansion in human history" as accelerating. Shares trade at $196.75, up 5.49% YTD and 911.03% over five years. Notably, Polymarket assigns only a 39% probability of a July close above $200, suggesting the market views current levels as consolidation rather than blowoff.
Microsoft delivered Q3 FY26 revenue of $82.89B with Azure up 40%. CEO Satya Nadella reported "Our AI business surpassed an annual revenue run rate of $37 billion, up 123% year-over-year." Commercial RPO reached $627B, and capex ran $30.88B. However, shares sit at $399.94, down 19.19% YTD—a gap between 123% AI growth and negative stock performance that Ives argues investors should disregard as part of the broader capex-versus-free-cash-flow debate.
Taiwan Semiconductor Manufacturing posted Q2 2026 revenue of $40.2B, up 36.0%, with EPS beating expectations. Nodes at 7nm and below represented 77% of wafer revenue, and 2nm has entered ramp. Full-year 2026 revenue growth is guided slightly above 40% in USD. Shares are up 31.99% YTD and 64.25% over one year, validating Ives' assertion that demand signals from chip and memory players constitute the real breadcrumbs.
Johnson Controls represents AI-adjacent strength. Q2 FY26 revenue was $6.14B, and CEO Joakim Weidemanis reported "Orders grew 30% and backlog reached a record $20 billion, reflecting strength in data centers and other high-growth, technology-driven operating environments where we differentiate." Full-year adjusted EPS guidance was raised to approximately $4.85. Shares trade at $138.97, up 20.43% YTD, with analyst target $156.37.
NXP Semiconductors addresses the enterprise and industrial edge of Ives' thesis. Q1 2026 revenue reached $3.18B, with Industrial and IoT growing 24%, and Q2 guidance implying 18% YoY growth. CEO Rafael Sotomayor cited "growing customer adoption of our differentiated portfolio, particularly in industrial and automotive processing that supports software-defined vehicles and physical AI." Shares sit at $263.50, up 24.38% YTD, with a forward P/E of 18x.
Ives cautioned that "It's very easy to get scared into certain narratives or what Nvidia does 8 hours after they report a quarter." Historical data supports this: NVIDIA has beaten five quarters in a row yet averaged a -1.58% day-of reaction. The next monetization checkpoints—hyperscaler capex signals, enterprise AI revenue disclosures, and 2nm ramp updates from TSMC—will determine whether the third-inning call proves prescient or premature.