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- Strong fundamentals will boost tech stocks up another 7%-10% through the rest of 2021, Wedbush's Dan Ives said.
- The tech analyst sees a rotation out of Chinese stocks amid ongoing regulation as a tailwind for US tech names.
- Ives sees an especially positive set-up for FAANG stocks, cloud names, and cybersecurity companies.
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Investors should expect a strong year-end rally for tech stocks led by FAANG and names within the software and cloud spaces, according to Wedbush's Dan Ives.
In a Sunday note, the senior analyst said that further multiple expansion and strong fundamentals will boost tech stocks up another 7%-10% for the rest of 2021.
One tailwind for the sector is the ongoing regulatory clampdown in China that began with the abrupt cancellation of Ant Group's IPO last year and has since spread to sectors like education, gaming, and autos. Ives explained that the regulations are adding pronounced risk to Chinese tech stocks and leading investors to rotate into US stocks.
"We believe these dynamics will yet again bode well for US tech stocks as the favorable backdrop and rotation away from Chinese tech into US tech creates a 'nirvana set up' for FAANG names and the tech sector into the next 6 to 9 months, he said.
Additionally, the Fed's signal to keep rates lower for longer is "very bullish" for high-growth, technology names, said Ives.
He's especially bullish on tech stocks within the cloud and cyber security spaces, as he sees a "$300 billion growth opportunity" for companies that can provide solutions against cyber attacks. Varonis Systems is one of the firm's top cyber names.
Meanwhile, Wedbush's favorite cloud names include Microsoft, Docusign, NICE Ltd., and Pegasystems. Apple remains Wedbush's top FAANG pick.