Investors around the world are reeling from a historic sell-off, with a more than 12% overnight plunge triggering a market catastrophe that has U.S. markets in the red.
Amid this turmoil, Wedbush analysts urged calm and strategic action, particularly in the technology sector.
According to Wedbush, “Now is not the time to panic in the tech sector; it is time to go bargain hunting on our top tech names after this wave of panic selling.”
The firm says several factors have converged to create this “perfect storm” risk-off environment, including the reversal of the Nikkei-yen carry trade, last week's tech weakness, Warren Buffett's decision to sell Berkshire Hathaway's (NYSE:) 50% stake in Apple (NASDAQ:) and geopolitical jitters.
However, Wedbush believes these events create a unique buying opportunity. “We do not hide in times of panic and market chaos,” the note states, noting that historically, these types of sales have provided the best long-term opportunities to invest in technology leaders such as Microsoft (NASDAQ:), Apple, Nvidia (NASDAQ:), Salesforce (NYSE:), Oracle (NYSE:), Palo Alto Networks (NASDAQ:), Tesla (NASDAQ:), Alphabet (NASDAQ:) and amazon (NASDAQ:).
Despite the current market turbulence, Wedbush maintains an optimistic outlook on the technology sector, driven by the ongoing ai revolution.
They say “this is just a moment of stress in a multi-year bull run for tech stocks that needs guidance.”
The firm underlines its confidence in a “soft landing environment” in which the Fed will enter what it sees as a major rate-cutting cycle over the next 18 months. In addition, the ai sector is seen as entering a new phase of growth, reminiscent of the early days of the internet.
This earnings season has reinforced Wedbush's positive outlook, with strong results and optimistic forecasts from major technology players.
They point out that companies such as Microsoft, Google and amazon have shown strong cloud growth and the ai monetization phase is gaining momentum.
“We are focused on technology spending and the winners who will take center stage in this massive development of ai technology,” Wedbush emphasizes.
“We would focus more on what's happening at companies like Apple (bullish call and Cook's outlook), Nvidia, Microsoft (Azure 2H accelerated), Alphabet, amazon (monster AWS number), ServiceNow (NYSE:) and AMD (NASDAQ:) as barometers and see the forest through the trees despite this morning's carnage,” they concluded.
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