Wedbush sees upcoming earnings season critical for tech space

Tenable Holdings

18/01/2022 13:32

** Wedbush says underlying growth for technology space is
being underestimated by the Street; sees upcoming earnings
season as critical for tech stocks to turn the tide and derail
negative sentiment triggered by Fed's policy tightening backdrop
    ** The Nasdaq index  .IXIC  and S&P 500 technology sector
 .SPLRCT  are down 4.8% each YTD as growing prospects of at
least three interest rate hikes this year fueled a rally in U.S.
Treasury yields, pressuring richly valued tech-heavy growth
names  .N  US/ 
    ** Wedbush adds Street needs to hear positive/encouraging
2022 outlook (including a moderating chip shortage for 1H) over
the next few weeks, with Microsoft's  MSFT.O  results (Jan 25) a
major one to watch as a barometer
    ** Anticipates $1 trillion of cloud spending over the coming
years with a massive investment cycle also focused on big data
analytics, cyber security, AI, and 5G; growth prospects are two
to three times normalized levels
   ** Into earnings season, Wedbush prefers Apple  AAPL.O  and
MSFT among large cap names; Zscaler  ZS.O  and Palo Alto
Networks  PANW.N  are among its cyber security picks, while it
favors Tesla  TSLA.O  and Li-Cycle  LICY.N  in EV space
    ** Tech stocks are particularly sensitive to rising yields
because their value rests heavily on future earnings, which are
discounted more deeply when bond returns go up.

 (Reporting by Devik Jain in Bengaluru)
 ((Devik.Jain@thomsonreuters.com; within U.S. +1 646 223 8780;
outside U.S. +91 80 6182 2062; ;))