The painful tech selloff is an opportunity to own these long-term growth winners, analyst says

Technology stocks were once again leading the way lower. The tech-heavy Nasdaq Composite COMP, -0.53% fell 2.3% last week as inflation fears mounted — although the index did surge 2.3% on Friday. The Nasdaq fell 0.8% in early trading on Monday.

In our call of the day, Wedbush analyst Daniel Ives said that despite rotation and inflation fears compressing high multiple tech stocks, his long-term bullish thesis for the sector remained unchanged.

In fact, the veteran tech analyst doubled down on his view and said the selloff had presented an opportunity. “We believe this painful selloff in tech has created the opportunity for investors to own the secular tech winners for the next 3-5 years,” he said in a note.

Wedbush said those secular winners included the FAANG tech stocks (Facebook FB, -0.63%, Amazon AMZN, +1.76%, Apple AAPL, -1.15%, Netflix NFLX, -1.25% and Google GOOGL, +0.12% ), of which Apple was its favorite, and cloud names — most notably Microsoft MSFT, -1.25%, DocuSign DOCU, -0.43% and Pegasystems PEGA, -1.25%.  

Ives accepted that the reopenings would bring about growth moderation for some of the poster children of the work-from-home era, including Zoom ZM, +0.35%, Citrix CTXS, -1.23% and Slack WORK, -0.48%, but he sees a $2 trillion digital transformation on the horizon in the cloud space, cybersecurity and 5G market boosting growth in the years ahead.

The tech bull cycle will keep moving upward in the second half of this year and “well into 2022,” he said, citing those outsize growth prospects ahead.

“Cloud and hybrid cloud environments represent one of the most transformational growth opportunities we have seen in our 20+ years of covering tech stocks,” he said.

Wedbush said the recent ransomware attack on the Colonial Pipeline showed the importance of cybersecurity. Ives said he was “befuddled” by the lack of cybersecurity infrastructure around utilities and federal assets and that efforts to improve that could benefit a number of names such as Telos TLS, -0.82% and Palantir PLTR, +1.32%. Well-positioned cybersecurity names also included Palo Alto PANW, +0.03%, Fortinet FTNT, -0.74%, SailPoint SAIL, -1.35%, CrowdStrike CRWD, -1.04%, Tenable TENB, -1.56%, CyberArk CYBR, -3.51%, Varonis VRNS, -1.16% and Zscaler ZS, -0.51%, he said.

The tweet

Hours after sparking a bitcoin selloff, Tesla TSLA, -1.54% Chief Executive Elon Musk clarified that the company hasn’t sold any bitcoin. It comes after Twitter TWTR, +1.01% user @cryptowhale said investors would “slap themselves when they find out Tesla dumped the rest of their bitcoin holdings. With the amount of hate @elonmusk is getting, I wouldn’t blame him…” Musk responded: “indeed.” 

The markets

U.S. stocks DJIA, -0.37% SPX, -0.38% fell at the open, after closing higher on Friday at the end of a tumultuous week.

Stocks in Japan NIK, -0.92% and Taiwan Y9999, -2.99% fell on Monday, after both countries tightened restrictions in response to a new wave of COVID-19 cases. Those fears were seemingly felt by European investors, as the Stoxx 600 SXXP, -0.05% ticked lower in early trading.

The buzz

Telecommunications company AT&T T, +3.01% confirmed plans on Monday to combine its WarnerMedia business with factual-television company Discovery Inc. DISCA, -0.87% in a deal worth $43 billion.

Hexo Corp. HEXO, +1.65% said Monday it has agreed to buy 48North Cannabis Corp. NCNNF, -2.79% in an all-stock deal valued at about C$50 million ($41.3 million) in the cannabis sector’s latest merger.

Colonial Pipeline — the operator of the largest U.S. gasoline pipeline, which was hit by a ransomware attack earlier this month — said on Saturday it has resumed normal operations.

The head of the U.S. Centers for Disease Control and Prevention, Dr. Rochelle Walensky, insisted the decision to ease mask-wearing guidance for fully vaccinated Americans had nothing to do with political pressure, in an interview on “Fox News Sunday.”

Pubs, restaurants and cinemas were among the venues opening up indoors on Monday, as the U.K. took another major step out of lockdown, despite concerns over an Indian variant of the coronavirus that causes COVID-19.

Random read

Hollywood star Tom Cruise signs soccer shirts on movie set to help a pandemic-hit local team.

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