- The recent fall in tech stocks has created a buying opportunity, according to Wedbush's Dan Ives.
- Ives said he sees a $2 trillion digital transformation around cloud, cybersecurity, and 5G in the coming years lifting tech shares.
- The analyst noted names like Apple, Microsoft, Zscaler, Docusign, and more are set to outperform moving forward.
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Tech stocks have taken a hit in recent weeks amid a rotation away from highly valued growth names and into historical value plays – and recent inflation fears are only adding to the bearish move.
The drop has presented a rare buying opportunity in tech shares, according to Wedbush's managing director of equity research Dan Ives.
In a note to clients on Monday, Ives said his "bullish long-term thesis on the tech sector remains firmly unchanged due to an incoming "4th industrial revolution."
The analyst believes there will be a $2 trillion of digital transformation in the cloud business, cybersecurity, and 5G over the coming years, which will help to boost tech shares to new heights.
"Cloud and hybrid cloud environments represent one of the most transformational growth opportunities we have seen in our 20+ years of covering tech stocks and is not going away with many CIOs ripping the band-aid off and going fully cloud over the next few years," Ives wrote.
"Herein speaks to why despite the rotation, multiple compression, and red screens we stay unwavering on our multi-year bull thesis for tech stocks which we expect will go well into 2022," he added.
Ives went on to discuss opportunities in the cybersecurity space after the recent Colonial Pipeline ransomware attack, saying he is "befuddled by the lack of core next-generation security infrastructure" around utilities and federal assets in light of recent cyber threats from all angles.
The analyst said hacks like the Colonial Pipeline ransomware attack and the Biden administration's focus on cybersecurity mean there are plenty of opportunities in the sector.
Wedbush's top picks in cybersecurity include Fortinet, Sailpoint, Crowdstrike, Tenable, CyberArk, Varonis, Zscaler, and Palo Alto.
Finally, Ives said he believes this is not a time to give up on tech stocks, but instead double down on secular winners including Apple, Microsoft, Pegasystems, and DocuSign.
"In a nutshell, we believe relative to the outsized growth prospects ahead, this is not the time that we are throwing in the white towel on our tech bull thesis but rather doubling down on this opportunity to own the secular winners in FAANG, cloud, cybersecurity, and 5G looking ahead," Ives wrote.