Investors globally are reeling from a historic sell-off, with the Nikkei plunging over 12% overnight, triggering market carnage that has US markets deep in the red.
Amid this turmoil, Wedbush analysts urged calm and strategic action, particularly in the tech sector.
According to Wedbush, "This is not the time to panic on the tech trade; it's the time to go bargain hunting for our top tech names after this panic sell-off."
The firm says that several factors have converged to create this "perfect storm" risk-off environment, including the Nikkei/Yen carry trade unwind, last week's tech weakness, Warren Buffett's decision to sell 50% of Berkshire Hathaway (NYSE:BRKa)'s Apple (NASDAQ:AAPL) stake, 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, highlighting that historically, such sell-offs have provided the best long-term opportunities to invest in tech leaders like Microsoft (NASDAQ:MSFT), Apple, Nvidia (NASDAQ:NVDA), Salesforce (NYSE:CRM), Oracle (NYSE:ORCL), Palo Alto Networks (NASDAQ:PANW), Tesla (NASDAQ:TSLA), Alphabet (NASDAQ:GOOGL), and Amazon (NASDAQ:AMZN).
Despite the current market turbulence, Wedbush maintains a bullish outlook on the tech sector, driven by the ongoing AI revolution.
They assert, "This is just a white knuckle moment in a multi-year bull run for tech stocks that need hand holding."
The firm underscores its confidence in a "soft landing environment" with the Fed entering what it sees as a major rate-cutting cycle over the next 18 months. Moreover, the AI sector is seen as entering a new growth phase, reminiscent of the early days of the internet.
This earnings season has reinforced Wedbush's positive outlook, with strong performances and optimistic forecasts from major tech players.
They note that companies like Microsoft, Google, and Amazon have shown robust cloud growth, and the AI monetization phase is gaining momentum.
"We focus on tech spending and the winners that will be front and center in this massive AI tech buildout," Wedbush emphasizes.
"We would strongly focus more on what is happening at the likes at Apple (bullish conf. call and outlook from Cook), Nvidia, Microsoft (Azure 2H accel), Alphabet, Amazon (AWS monster number), ServiceNow (NYSE:NOW), and AMD (NASDAQ:AMD) as barometers and see the forest through the trees despite this morning's carnage," they concluded.