Dan Ives: Tech Has 15% More Upside in 2026 and AI Trade Is in "3rd Inning"

Dan Ives said the AI trade is still in the "third inning" and sees another 15% upside for tech stocks through the remainder of 2026. He highlighted Palantir as his favorite non-Magnificent Seven name, calling it a potential trillion-dollar company within two to three years, while also pointing to Intel, Cisco, Dell, and software stocks as the next beneficiaries of AI spending. The article is mostly analyst commentary, but it reinforces a bullish setup for AI and broader tech exposure.

Analysis

The setup is less about whether AI is ‘over’ and more about where the marginal dollar of performance shifts next. If hyperscaler capex stays elevated, the next leg should broaden from pure compute beneficiaries into the picks-and-shovels adjacencies: legacy servers, networking, storage, and enterprise software with AI attach rates. That matters because the market has already re-rated the obvious winners; the higher-conviction opportunity is in names where revenue growth can inflect while valuation still reflects skepticism.

The biggest second-order signal is guidance, not headlines. If management teams reaffirm or raise AI-related capex, the market will likely extend duration on the theme and keep multiple expansion alive for another 2-4 quarters. If spending pauses, the trade can unwind fast because many of the “second derivatives” have weaker fundamental support than the megacaps and are more exposed to crowded positioning than to near-term earnings power.

Palantir is the clearest momentum beneficiary, but it is also the most vulnerable to disappointment because expectations already embed a long runway. The more interesting risk/reward may sit in software broadly, where underownership and lagging relative performance create catch-up potential if buyers rotate from hardware into monetization stories. In contrast, hardware names mentioned here are likely trading as sentiment proxies for AI budget durability rather than standalone businesses, so they can move sharply on capex tone even if end-demand remains intact.

The contrarian read is that this is not a clean ‘buy everything tech’ signal; it is a breadth rotation setup. The trade is becoming more selective, and the crowded long is still the large-cap AI complex, while the undercrowded expression is software and infrastructure with credible AI monetization but less obvious consensus sponsorship. That creates a window for relative-value positioning rather than outright beta chasing.

Key Decisions for Investors

• Long PLTR on pullbacks over the next 2-6 weeks, but size below core megacap exposure; reward is continued multiple expansion if AI budget commentary stays constructive, while risk is a sharp de-rating on any guidance hiccup.
• Initiate a relative-value long XSW / short QQQ basket for a 1-3 month catch-up trade; the thesis is software underperformance versus AI capex durability, with upside if software catches even a fraction of the current hardware-led flow.
• Use INTC, CSCO, and DELL as tactical long expressions into earnings/capex updates; these are better suited to trading around guidance than owning outright, with asymmetric upside if AI spend broadens beyond the megacaps.
• Avoid chasing NVDA here; treat it as a funding source versus a fresh entry unless there is a new inflection in order growth or gross margin, because the market already prices perfection and the upside is more capped than the second-order beneficiaries.
• If tech breadth improves, rotate part of any PLTR/NVDA gains into software names with depressed relative performance; the best risk/reward is in delayed beneficiaries, not the highest-multiple leaders.