- Wedbush securities says the recent sell-off in tech stocks is merely a short-term setback.
- Analyst Dan Ives says tech stocks are in the early stages of a multi-year bull rally set to roar in 2022.
- Microsoft, DocuSign, Apple, and Zscaler are among Wedbush’s top tech picks.
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The recent “brutal” sell-off in tech stocks was simply a short-term setback in the midst of a multi-year bull rally that will soar in 2022, says Wedbush senior tech analyst Dan Ives.
The Nasdaq has slid roughly 6% in the last month as investors ditch highly valued tech stocks and rotate into cheaper names set to outperform in an economic recovery. But Ives says tech stocks aren’t done rallying, and this period is simply a “valuation digestion period” for tech.
“While valuations will continue to be an emotional bull/bear debate, the fundamental growth on the horizon for these next generation technologies is unprecedented as this 4th Industrial Revolution begins to take hold,” the analyst said.
Wedbush recommends investors own tech because the sector will benefit from the next decade of technological innovations in cloud computing, artificial intelligence, cybersecurity, and 5G. He sees this digital transformation as the “4th Industrial Revolution.”
Tech stocks also sold off last week as the yield on the 10-yr Treasury spiked above 1.6% for the first time in a year. Growth companies like technology names favor lower rates as borrowing costs are cheaper. But Ives said the 40 basis point move on the 10-year Treasury does not change the dynamic of technological change he sees occurring over the next decade.
Here are some of Wedbush’s favorite tech names:
- Top Cloud Computing Plays: Microsoft, DocuSign, Salesforce.com
- Top Healthcare Cloud Play: Nuance
- Cyber Security Plays: Zscaler, Fortinet, Varonis, SailPoint, CyberArk, Tenable, and Telos
- 5G Super Cycle Play: Apple
- Automotive Cloud Play: Cerence
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