- The recent tech sell-off is a "golden buying opportunity," according to Wedbush.
- The midweek rout in tech stocks was partly triggered by Trump's hawkish comments about Taiwan.
- But solid earnings results in the second-quarter should spark a rebound in the tech trade, Ives said.
The sell-off in technology stocks represents a "golden buying opportunity" for investors, according to Wedbush analyst Dan Ives.
The recent sell-off was partly sparked by former President Donald Trump's hawkish comments on Taiwan and the potential for more tariffs in an interview with Bloomberg Businessweek.
"They did take about 100% of our chip business. I think Taiwan should pay us for defense. You know, we're no different than an insurance company. Taiwan doesn't give us anything. Taiwan is 9,500 miles away. It's 68 miles away from China," Trump said.
"Taiwan took our chip business from us, I mean, how stupid are we? They took all of our chip business. They're immensely wealthy. And I don't think we're any different from an insurance policy. Why? Why are we doing this?" Trump asked.
With polls and betting markets recently moving in Trump's favor for the November election, investors took Trump's comments seriously, with the Nasdaq 100 falling more than 3% since the interview was released. Chip stalwarts also sold off on reports that President Joe Biden's administration was readying a fresh round of restrictions on trade with China to limit its access to cutting-edge tech.
But Ives said Trump's rhetoric can represent more bark than bite, and that the latest tech sell-off ultimately represents a great buying opportunity for long-term investors.
"This is all a game of high stakes poker for the Trump campaign and a shot across the bow against XI/Beijing," Ives wrote. "We believe the 'Trump trade' does not ruin the AI Revolution thesis and tech bull market and to some extent it's just a negotiation that will be a long and drawn out process."
Semiconductor production won't be moving to the US in a significant way anytime soon — Taiwan produces about 92% of the world's advanced microchip supply.
And with the global economy dependent on the silicon wafers that come out of Taiwan, it's not in the US' best interest to disrupt that by letting China take it over.
Principal Asset Management's Todd Jablonski said this tech sell-off is simply a small blip in the grand scheme of things.
"A possible Trump administration doesn't disrupt the forward momentum of big tech in the U.S. These types of market blips are common as we approach elections, and investors should be cautious in making moves based on these fluctuations," Jablonski said in a note on Thursday.
What ultimately matters most for the price of tech stocks over the long-term is earnings, and that area is still a bright spot, according to Ives.
"Our playbook continues to be own the AI Revolution thesis and winners on sell-offs like yesterday. We believe 2Q earnings will be a major positive catalyst for the tech sector and expect tech stocks to be up another 15% for the year adding to the robust tech gains in 1H2024 as now the broader tech growth story takes center stage," Ives said.