Tech stocks have been on a dream run this year, with the likes of Nvidia Corp. (NVDA  ) and Meta Platforms, Inc. (META  ) leading the way.

Sentiment toward the tech space was extremely negative coming into 2023, but stocks from the sector belied expectations, according to Wedbush analyst Daniel Ives. "AI has changed the tech world and investor sentiment with this transformational technology an 'Internet Moment' in our opinion," he said.

Tech On The Boil: Ives said he expects tech stocks to heat up in the second half of the year, with a broader sector-wide rally likely as investors further digest the ramifications of the $800 billion AI spending wave on the horizon. This would positively catalyze the software, chip, hardware and tech ecosystem over the next year, he added.

Tech stocks will likely rally another 12-15% in the second half of the year, led by software and the chip sector, with big tech remaining the "torch bearer" for the rally, the analyst said.

Enterprise spending, according to the analyst, is holding up and showing pockets of strength in the second quarter, especially in cloud spending with respect to Microsoft Corp. (MSFT  ), Alphabet, Inc. (GOOGL  ) (GOOG  ) and Amazon, Inc.'s (AMZN  ) AWS. This supports Wedbush's thesis that Street estimates will move higher from the current levels into 2024, he added.

AI Gold Rush: "The 2nd, 3rd and 4th derivatives of the AI Gold Rush are just starting to evolve for the tech landscape based on our recent work in the field and we view this as a '1995 Internet Moment'...NOT a 1999 Dot.Bubble Moment," Ives said.

"This is the start of a 4th Industrial Revolution playing out across tech over the coming years that is still being underestimated by the Street in our opinion," he added.

In 2024, the analyst expects that AI will account for up to 8-10% of overall IT budgets, compared to about 1% in 2023. Software-based AI spend will likely be a laser focus of chief investment officers around the globe, he said.

Ives singled out Microsoft and Nvidia as companies that are on top, while suggesting that many will benefit in the "AI Arms Race." Among the other companies standing to benefit are:

"We believe this ultimately is the start of a new tech bull market we see heading into 2024 being driven by this AI revolution coupled with a stabilizing IT spending environment," Ives said.