Despite the volatility in financial markets because of the uncertainty regarding the impact of the coronavirus, Wedbush Securities sees a “golden buying opportunity” for investing in the technology sector.
“Our long standing view during this last decade … is that we are in the midst of a unprecedented tech bull market,” analysts Dan Ives and Strecker Backesaid in a note this week.
The analysts pointed specificifally to themes such as the enterprise move to cloud computing, a transformational 5G super cycle, EV auto demand inflection, streaming cord cutting paradigm shift, and cyber security.
“With this backdrop our playbook/strategy is not to hide under the covers in markets like this, watch the red screens with frozen fear, and let the uncertainty of the coronavirus outbreak cloud our bullish longer term view of these transformational tech names and themes for the coming years,” the analysts said.
Still, they said the virus will in the near-term negatively impact the supply chain, cause massive demand uncertainty and ultimately add a major risk profile to valuations and tech stock multiples.
Yet, the analysts argue that the virus won’t “massively disrupt or erase the long term transformational bullish trends” within the tech sector.
Wedbush’s list of the top 10 tech stocks to own right now: Microsoft, Apple, Tesla, Adobe, Zscaler, SailPoint, Nuance, DocuSign, NICE and Uber.
“This is a very scary and uncertain time for investors across the board with the unprecedented coronavirus outbreak an omnipresent worry for the Street (and the general population).
“The economic impact of this coronavirus outbreak in the near-term could be dramatic with the supply chain in China still in the early stages of recovery mode, however we view this tragic outbreak more as a ‘negative shock’ event rather than negatively impacting the longer term secular trends we have and continue to be bullish on over the last decade.”
As a result, the analysts said they “strongly encourage” investors to own the technology trends and winners that will be driving the next 5-10 years.
“While fundamentals in the next 3-6 months will carry more uncertainty and the supply chain remains in recovery mode with a cloudy timetable, we view this period as a time to selectively own the secular winners in tech for the coming years despite the volatility and nervousness abound in the market with more questions than answers around COVID-19 and its global health/economic impact.”