Nvidia (NVDA) will remain a core driver of the AI boom, with demand for its Blackwell chips far exceeding supply, Wedbush said in a note on Wednesday.

The brokerage firm said it estimates that every $1 spent on Nvidia generates an additional $8 to $10 of spending across the tech sector.

The company's shares have come under pressure in recent weeks, despite posting strong results, due to concerns about an AI bubble, US-China restrictions, and broader tech volatility, Wedbush said.

It said the weakness is temporary and expects tech stocks to rally into year-end as investors focus on expanding AI use cases.

Wedbush also said the company has also seen a rise in competition in the segment recently, particularly from Google's (GOOG, GOOGL) TPU chips in partnership with Broadcom (AVGO) and from Advanced Micro Devices (AMD), but Nvidia is expected to remain the clear leader for the next several years.

The firm said the AI cycle is still in its early stages, not a repeat of the late-1990s tech bubble, and Nvidia's latest quarter reinforces that outlook.