AI spending still early innings, analyst says after Tesla, Google selloff

Wedbush Securities managing director Dan Ives appeared on CNBC's "Power Lunch" on Thursday to defend the artificial intelligence spending strategies of major tech firms in the face of a sharp market pullback. Tesla stock fell 14.5% and Alphabet slid nearly 7% despite both companies posting strong earnings results. Notably, Google Cloud revenue jumped 82% to $24.8 billion（約4兆円）, yet the market still punished Alphabet for the heavier capital spending in AI infrastructure.

Ives reframed the selloff as a timing problem rather than a valuation problem. He characterized the AI spending buildout as still in its very early stages, stating: "This is an arms race that's playing out and we're only 15% of the way through." He drew an analogy to early Las Vegas Strip construction, where the buildings came first and the payoff followed later—suggesting that investors should expect years of heavy capex before these investments generate meaningful returns. This perspective runs counter to the growing skepticism about an "AI bubble" elsewhere in the tech sector.

Regarding Tesla specifically, Ives acknowledged that investor patience is fading. The company's AI story, autonomous driving progress, and Optimus robotics ambitions have not yet delivered the near-term payoffs that Wall Street is seeking. However, Ives described Tesla's capex spending as a "gut check moment" rather than grounds to abandon the overall investment thesis. On a broader corporate note, Ives estimated better-than-80% odds that SpaceX eventually acquires Tesla, a probability higher than the roughly 69% chance priced into Kalshi's prediction market for a merger before 2028.

The timing of Ives' commentary sets the stage for a pivotal test. Intel reported earnings the same evening, and next week's earnings reports from major Big Tech firms will determine whether demand data supports Ives' "early innings" narrative or whether the market's more skeptical read—that companies are overspending relative to near-term returns—proves correct.

The selloff in Tesla and Alphabet on Thursday underscores a widening gap between company narratives and investor sentiment on AI spending. Both firms posted strong revenue results—Google Cloud's 82% jump to $24.8 billion（約4兆円） is particularly robust—yet the market punished them for the capital outlays required to support their long-term AI strategies. Ives' "15% of the way through" framing is a direct rebuttal to this skepticism: he argues that hyperscalers are in the foundational phase of a multi-year buildout, and the infrastructure investments will eventually generate returns, much as the physical infrastructure of the Las Vegas Strip preceded its profitability.

The timing of this commentary is significant. Ives positioned the pullback as a test of patience rather than a fundamental problem with the companies' AI bets. On Tesla, he acknowledged that investor patience is wearing thin—the AI story, autonomous driving, and Optimus robotics have not yet delivered the near-term payoff investors expected—but he stopped short of calling the investment thesis broken. This nuance matters: a "gut check moment" is different from a reason to exit. The real vindication or refutation of Ives' view will come next week when major tech companies report earnings and the market can assess whether the demand underpinning these capex decisions is actually materializing.