The tech sell-off isn’t the second dot-com bubble — it is a “buying opportunity” for the suitable shares, in accordance with Wedbush Securities’ Dan Ives. “We view this historic sell-off as more of a generational buying opportunity for the right tech names/ winners in 2023 and 2024 rather than a time to throw in the towel on the tech sector with a piling on effect we are seeing take place on the Street today,” Ives wrote in a word on Friday. “Even our customer and IT conversations this week further enforce our positive view of cyber security and cloud spending in this nervous macro.” For some traders, the huge underperformance in tech shares this yr casts doubt on the potential of the sector from right here. The Nasdaq Composite is down about 25% yr up to now, as rising rates of interest and provide chain challenges have steered traders away from development shares. Many former high-flying names are down as a lot as 70% to 80%, Ives mentioned. However, the analyst urged traders to not decide all tech shares in the identical approach. While weaker tech outfits have disappeared up to now as the results of a downturn, different names have emerged as clear winners. Picking the winners and losers Investors ought to begin choosing out the winners and losers of the following tech cycle, Ives mentioned. The analyst believes valuations for high-quality development shares are “very compelling” for traders with a time horizon out two to a few years or longer — particularly as enterprise capital corporations, personal fairness and household workplaces are poised to commit greater than $1 trillion to the expertise sector. Companies in macro-cloud computing, cybersecurity, electrical automobiles and 5G smartphones would profit from the following iteration of a tech development cycle, Ives mentioned. Wedbush Securities highlighted a number of picks from its playbook that can profit from these traits. Cloud computing names embody Amazon , Google , Oracle and Adobe . Cybersecurity outfits set to thrive embody Palo Alto Networks , Check Point and Zscaler . Top electrical automobile names embody Tesla , Li-Cycle and XOS Trucks . The analysis agency’s prime giant cap picks had been Apple , Microsoft and Tesla . To make certain, each Apple and Tesla must work via Covid-related lockdowns in China within the close to time period, however valuations for each firms look compelling primarily based on the 2024 outlook, Ives mentioned. Meanwhile, traders ought to avoid tech corporations that concentrate on e-commerce or actual property, or which have benefited closely from the work-from-home development, the analyst mentioned. Investors must also steer clear of firms with dangerous administration groups. “This is a painful reset of tech stocks and valuations with opportunities (and train wrecks as well of course) abound for the right names with the right end markets,” Ives wrote.
Traders on the ground of the NYSE, May 11, 2022.
Source: NYSE
The tech sell-off isn’t the second dot-com bubble — it is a “buying opportunity” for the suitable shares, in accordance with Wedbush Securities’ Dan Ives.
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