- Technology analyst Dan Ives of Wedbush Securities is still bullish on the tech sector in 2023.
- Cutting labor costs will help firms boost profitability, even in a weaker economy.
- Here are Ives’ favorite 10 tech stocks to own right now.
Long-time bull Dan Ives of Wedbush Securities admits that his optimism about technology stocks was off-base last year, but he’s still not ready to change his tune.
The tech-focused Nasdaq Composite index fell over 33% in 2022 as historically high earnings multiples contracted under higher interest rates brought about by rampant inflation.
Heading into 2023, Wall Street is divided about the tech sector. Many analysts are skeptical that tech firms can continue to increase revenue and earnings while the economy loses momentum.
But instead of unloading tech stocks, Ives believes that now is the time to pounce.
“Our approach into 2023 is a much more opportunistic one for the tech sector as this near-term macro climate uncertainty will lead to the next growth cycle over the coming years that begin now in our opinion,” Ives wrote in a January 5 note.
Tech companies can not only survive this slowdown, but become more profitable by getting leaner, Ives wrote. Meta Platforms (META) is an example of a stock that investors rewarded for its plan to cut costs through layoffs and more careful spending, Ives noted.
And while firms across stock market sectors will likely trim expenses as well, Ives wrote that his conversations with chief investment officers leads him to believe that companies will continue to make cybersecurity and cloud infrastructure priorities in their budgets.
Lower costs and resilient revenue will help tech companies top a relatively low bar for estimates, Ives wrote. He noted that earnings multiples for the sector are already below their five-year average and added that tech names haven’t been this under-owned since 2009.
All of that makes Ives very bullish on tech in 2023.
“We double down on our call that we believe tech stocks will be up 20% this year and are way oversold at current levels,” Ives wrote.
10 top tech stocks to buy in 2023
While Ives is bullish on tech broadly, he sees some industries within the sector as especially enticing. Six of his 10 favorite stocks are in the cybersecurity industry, and two other names — Microsoft (MSFT) and Salesforce (CRM) — are cloud companies. Another top idea, Amazon (AMZN), also has a highly profitable cloud business. Last but not least is Apple (AAPL), which is Ives’ long-time favorite pick.
Below are the 10 outperform-rated tech stocks that Ives is most optimistic about in 2023, along with the ticker, market capitalization, Wedbush price target, and upside to that target for each.