It was a bad week for technology stocks. The Nasdaq fell 2.7% on Wednesday, and that drop looks set to continue on Thursday.
So buy the slump before tech stocks rise at least 25% higher this year, says veteran technology analyst Daniel Ives of investment firm Wedbush in our call of the day.
“Risk-free trading for technology has been painful for technology investors this week, as concerns over high valuations, bubble fears, rotation trading, increased yields and a focus on reopening games occupy the center from the stage, ”said Ives.
But, according to Ives, the digital transformation is just beginning and will last for several years among cloud, cybersecurity, e-commerce and 5G companies. These subsectors are the life of the technology party, with consumer and business demand catalyzing a “multi-year growth boom” ahead, the analyst said.
Although collaborative software companies like Zoom ZM,
Teams, Slack WORK,
and Citrix CTXS,
will see “moderate growth” in 2022, many executives told Wedbush that 30% to 40% of employees could continue to work remotely in some way. This will lead companies to “rip off the band-aid and become aggressive” with the transformations in the cloud, said Ives.
To see: Analysts say Zoom can continue to thrive in a vaccinated world
Investors should use the current market weakness to ensure that Apple AAPL,
Microsoft MSFT,
DocuSign DOCU,
Zscaler ZS,
Palo Alto PANW,
SailPoint SAIL,
and Nuance NUAN,
are included in their portfolios, advised Ives.
Across the sector, Wedbush predicts that technology stocks will rise by at least 25% next year. This will be driven by big names from Facebook FB,
Amazon AMZN,
Apple, Netflix NFLX,
and Alphabet GOOG, father of Google,
GOOGL,
as well as cloud and cybersecurity stocks, despite the recent sale, Ives said.
More broadly, Ives said that Uber UBER,
and Lyft LYFT,
– “names of disruptive technology recovery” – remain Wedbush’s favorite “reopening parts”, with profitability on the horizon and a huge increase in food delivery.
Don’t miss out: Lyft shares reach their highest prices since 2019, after the best week for the pandemic
And while technology regulation is a long-term risk, “there remains a Goldilocks environment for technology stocks with the Biden government,” according to Wedbush. Ives sees President Joe Biden as prone to reducing tensions in the “Cold Technology War” that is brewing between the United States and China, as well as encouraging cybersecurity initiatives.
Market bears will come out of hibernation to warn investors that the technology boom and bullish rally are over, Ives said. Wedbush believes that this is “a golden opportunity to own secular technology winners for the next 12 to 18 months with attractive ratings, given some of those sales”.
The buzz
The House of Representatives ended the week after police discovered a plot by the QAnon militia to attack the Capitol, but that did not prevent major legislation late on Wednesday. House Democrats have presented the Senate with the biggest reform of U.S. electoral law in at least a generation, along with a policing reform bill in honor of George Floyd, who died during a prison sentence in May 2020.
From an economic point of view, the initial claims for unemployment benefits released at 8:30 am Eastern time will be the main number. 750,000 Americans are expected to file for unemployment last week, a slight increase from 730,000 the previous week. Continued claims for unemployment insurance and factory orders for January are also due this morning, before Federal Reserve Chairman Jerome Powell speaks at The Wall Street Journal Jobs Summit at noon.
The SpaceX starship – a prototype for a future Mars mission – appeared to have landed to make founder Elon Musk proud. But just a few minutes after the touchdown was declared a success, it exploded with such force that it went to heaven again. And there is a video.
The CEO of the Texas power grid was fired. The network suffered a fatal failure in a freezing February that left millions without heat or electricity for days in one of the worst blackouts in US history.
The European Medicines Agency, the European Union’s drug regulator, has initiated a review of the Sputnik V COVID-19 vaccine developed in Russia.
The Competition and Markets Authority, the UK’s competition regulator, is investigating Apple about the terms and conditions governing developers’ access to the App Store.
Indian online retailer Flipkart, mostly owned by Walmart WMT,
is considering listing in the United States by merging with a special-purpose acquisition company, or SPAC, according to a report by Bloomberg that said the company could seek an appraisal of at least $ 35 billion.
The markets
Dow YM00 Futures,
are pointing down by around 120 points, in line with other ES00 stock market futures,
NQ00,
set to continue yesterday’s slide. The Dow DJIA,
fell more than 120 points on Wednesday along with other indices. UKX European shares,
DAX,
PX1,
fell after three consecutive days of gains, while the main Asian NIK indices,
HSI,
SHCOMP,
all fell by more than 2%.
The graph
If you think the titles are more unstable than normal … you are right. Our chart of the day, by Marshall Gittler of BDSwiss, shows how volatile the treasury market is at the moment. Gittler traces the MOVE index, which is like the bond market version of the VIX index for stocks. The volatility of the shares is almost normal, while the exchange rate is a little calmer than normal.
Random readings
A Tahltan woman from northern Canada cooks a moose head that looks fierce, tastes phenomenal and feeds a family.
A passenger flight circled Sudan when an underground cat attacked the pilot.
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