Wedbush: Tech Stocks Oversold, Apple Still a Top-Pick

21 JUNE 2022 - Wedbush analyst Daniel Ives has a message for investors selling tech stocks down to the ground: Would you stop it already?!?

Apple 3.0 ran part of a note he wrote Monday, wherein the analyst argued that “tech stocks have overcorrected” and that a mild recession is already baked-in at their current levels. Not that he doesn’t get it. Quoting his note:

In what has been an absolutely brutal year for the market and especially tech stocks, the path of least resistance for investors is to stay away from any risk assets till the dark economic storm clouds clear. We clearly could be looking at a very volatile few months still ahead as the Street tries to get a gauge if inflation has started to finally peak and what type of recession now likely lies ahead into 2023… While consumer-facing tech and WFH poster childs are seeing clear softening and demand starting to dry up in the field especially around digital advertising; on the other hand enterprise cloud, cyber security, and high priority pockets of IT budgets are holding up particularly well based on our recent checks.

Where does that leave Apple? In a kind of special Apple place. Tech’s going to go two directions in his estimation. E-commerce and “digital ad plays” could take continued beatings “with fears around soft 2Q results around the corner.” Meanwhile, the strong side of tech will be “driven higher by software, semis, cyber security, and product-driven names (Apple) as part of this digital transformation…” Quoting the analyst again:

Our view in a nutshell is that tech stocks have overcorrected and especially cloud/cyber names are way oversold at current levels for investors willing to own these names on the other side [of] this storm into 2023.

Apple shares remain a top-pick for Wedbush, along with Microsoft and Salesforce. The firm’s price target on Apple shares stays at $200.