Big-name tech stocks are 'safety blanket' amid banking industry woes
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With concerns about the banking markets multiplying by the day, it should be no surprise that investors are looking for areas of stability in the stock market. And for some, that stability could be in areas of the tech sector.
According to Wedbush analyst Dan Ives, technology stocks can currently provide a "safety blanket" for investors as "a game of musical chairs" continues to be played in the banking industry, and nerves across the financial market remain on edge.
Ives said that "even will all the skeptics and many yelling fire in a crowded theater on the tech sector," the tech-heavy Nasdaq Composite Index (COMP.IND) has risen by 13% this year, and more investors have moved into large-cap tech stocks over the last few weeks.
"Large cap tech and sub-sectors such as cloud and cyber security are seeing much more resilient growth than the Street had anticipated," Ives said, in a research report. "While budgets are under pressure across the board, enterprises have green-lighted projects and deployments in 2023 with many budgets now in place."
Ives said that if the banking sector was like a home plumbing system, "the pipes (are) starting to burst," whereas tech stocks, and so-Big Tech stocks have become a safer way of approaching Wall Street. Ives admitted the situation is strange.
"It sounds like Twilight Zone comment to many investors," Ives said.
Among individual stocks, Ives said Microsoft (NASDAQ:MSFT), Datadog (DDOG), MongoDB (MDB) and Salesforce (CRM) are favorites for cloud stocks. Ives also gave high marks to cybersecurity stocks such as Palo Alto Networks (PANW), CrowdStrike Holdings (CRWD) and CyberArk (CYBR).
Ives said Apple (NASDAQ:AAPL) remains his top tech pick this year. Wall Street analysts currently have a buy rating on Apple's (AAPL) stock, while Seeking Alpha authors give the shares a rating of hold. Seeking Alpha's Quant System, which historically outperforms the stock market, also has a consensus hold rating on Apple's stock.