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March 5, 2021, 4:55 a.m. EST

Buy this dip in Apple, Microsoft and these other tech stocks before they’re out of reach, says analyst

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By Jack Denton

It has been a bad week for technology stocks. The Nasdaq tumbled 2.7% on Wednesday and fell a further 2.1% on Thursday.

So buy the dip before tech stocks move at least 25% higher this year, says veteran tech analyst Daniel Ives of investment firm Wedbush in our call of the day .

“The risk-off trade for tech has been a painful one for tech investors this week as worries around high valuations, bubble fears, rotation trade, rising yields and a focus on reopening plays take center stage,” Ives said. 

But, according to Ives, the digital transformation is just getting started and will last a number of years among companies in cloud, cybersecurity, e-commerce and 5G. These subsectors are the life of the tech party, with consumer and enterprise demand catalyzing a “multiyear growth boom” ahead, the analyst said. 

Though collaboration-software groups like Zoom /zigman2/quotes/211319643/composite ZM -0.73% , Microsoft Teams, Slack /zigman2/quotes/212180539/composite WORK +0.48% , and Citrix /zigman2/quotes/206700852/composite CTXS +1.20% will see “moderating growth” into 2022, many chief executives have told Wedbush that 30% to 40% of employees could remain working remotely in some form. This will prompt companies to “rip the Band-Aid off and go aggressive” with cloud transformations, Ives said.

See: Analysts say Zoom can continue to thrive in a vaccinated world

Investors should use the current market weakness to ensure that the following companies are in their portfolios, according to Ives: Apple /zigman2/quotes/202934861/composite AAPL -0.25% , Microsoft /zigman2/quotes/207732364/composite MSFT +0.48% , digital document specialist DocuSign /zigman2/quotes/205992027/composite DOCU -0.54% , AI pioneer Nuance /zigman2/quotes/202549318/composite NUAN +0.68% , and cybersecurity groups Zscaler /zigman2/quotes/203585803/composite ZS -1.75% , Palo Alto /zigman2/quotes/207599953/composite PANW -1.01% , and SailPoint /zigman2/quotes/208922889/composite SAIL -0.82% .

Across the wider sector, Wedbush predicts that tech stocks will move at least 25% upward in the next year. That will be driven by big names Facebook /zigman2/quotes/205064656/composite FB -0.53% , Amazon /zigman2/quotes/210331248/composite AMZN +0.60% , Apple, Netflix /zigman2/quotes/202353025/composite NFLX -0.49% and Google parent Alphabet /zigman2/quotes/202490156/composite GOOGL -0.11% /zigman2/quotes/205453964/composite GOOG +0.05% , as well as cloud and cybersecurity stocks, despite the recent selloff, Ives said.

More broadly, Ives said that Uber /zigman2/quotes/211348248/composite UBER -0.64% and Lyft /zigman2/quotes/208999293/composite LYFT -1.61% — “disruptive tech recovery names” — remain Wedbush’s favorite “reopening plays,” with profitability on the horizon and a massive surge in food delivery.

Don’t miss: Lyft stock surges toward highest prices since 2019 after best week for rides of the pandemic

And while tech regulation is a long-term risk, “it still remains a Goldilocks environment for tech stocks with the Biden administration,” according to Wedbush. Ives sees President Joe Biden as likely to ramp down tensions in the “Cold Tech War” brewing between the U.S. and China, as well as encourage cybersecurity initiatives.

Market bears will come out of hibernation to warn investors that the tech boom and bull rally is over, Ives said. Wedbush believes this is “a golden opportunity to own the secular tech winners for the next 12 to 18 months at compelling valuations given some of these selloffs.”

The markets

Stocks continued Wednesday’s big slide /zigman2/quotes/210598065/realtime DJIA +0.48% /zigman2/quotes/210599714/realtime SPX +0.36% /zigman2/quotes/210598365/realtime COMP +0.10% to move move deeper into the red on Thursday. European stocks /zigman2/quotes/210598409/delayed UK:UKX +0.52% /zigman2/quotes/210597999/delayed DX:DAX +1.34% /zigman2/quotes/210597958/delayed FR:PX1 +0.85% were mixed but mostly lower while major Asian indexes /zigman2/quotes/210597971/delayed JP:NIK +0.14% /zigman2/quotes/210598030/delayed HK:HSI +0.61% /zigman2/quotes/210598127/delayed CN:SHCOMP +0.81% tumbled more than 2%.

The chart

If you think bonds have been bumpier than usual…you’d be right. Our chart of the day, from Marshall Gittler at BDSwiss, shows just how volatile the Treasury market is right now. Gittler charts the MOVE index, which is like the bond market version of the VIX index for stocks. Volatility in stocks is near normal while foreign exchange is a little calmer than usual.

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N/A
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US : U.S.: NYSE
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$ 306.18
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30.30
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N/A
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$875.14 billion
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/zigman2/quotes/210331248/composite
US : U.S.: Nasdaq
$ 3,399.44
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N/A
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$1701.59 billion
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$ 546.54
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N/A
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$243.25 billion
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US : U.S.: Nasdaq
$ 2,282.75
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$ 2,297.76
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N/A
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N/A
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$113.42 billion
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/zigman2/quotes/208999293/composite
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$ 63.40
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P/E Ratio
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N/A
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$21.20 billion
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$505,814
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34,200.67
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Volume: 348.18M
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4,185.47
+15.05 +0.36%
Volume: 2.21B
April 16, 2021 5:15p
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US : Nasdaq
14,052.34
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Volume: 4.03M
April 16, 2021 5:16p
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UK : FTSE UK
7,019.53
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DAX
DX : Xetra Indices
15,459.75
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Volume: 82,757
April 16, 2021 6:30p
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FR : France: Euronext Paris
6,287.07
+52.93 +0.85%
Volume: 85,545
April 16, 2021 6:05p
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JP : Nikkei
29,683.37
+40.68 +0.14%
Volume: 0.00
April 16, 2021 3:15p
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/zigman2/quotes/210598030/delayed
HK : Hong Kong Exchange
28,969.71
+176.57 +0.61%
Volume: 2.19M
April 16, 2021 4:09p
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/zigman2/quotes/210598127/delayed
CN : China: Shanghai
3,426.62
+27.63 +0.81%
Volume: 25.86B
April 16, 2021 3:01p
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