Hedge fund veteran Dan Ives says the explosive rise of AI-related stocks is not over yet.

In a new interview with CNBC, Ives says big tech stocks tied to AI could rise 20-25% next year.

“It’s my view that this is just starting the next stage of the AI revolution…

From software to cybersecurity to infrastructure, I continue to view it as this is just the beginning of the monetization of the AI revolution.”

Ives addresses concerns on whether the AI sector is artificially inflated through a closed loop of circular deals with companies like Nvidia.

“For Nvidia, for OpenAI, for what we see AMD and others – they’re putting stakes in the ground. I view it as for every dollar they spend, they’re getting back $8 to $10.

Now in the near term, there could be questions until it plays out, but I think we’re going to look out two, three, four years at these deals. Nvidia – they’re going to continue to be like that’s the one chip in the world that’s fueling the AI revolution. And I don’t see that slowing down.”

Ives says he’s also bullish on Palantir despite post-earnings declines.

“To me, you triple down because it’s my view on Palantir. I get it’s expensive today, but in the next two or three years, I think there’s a $1 trillion market cap…

They’re playing a different game in terms of any AI use case in the enterprise.”