Tech selloff on less dovish Fed a ‘buying opportunity,’ Wedbush says

A rout in technology stocks, following less dovish signals on rate cuts from the Federal Reserve, presents a buying opportunity, Wedbush analysts said, with artificial intelligence set to drive more gains in the coming year. 

U.S. technology stocks fell sharply on Wednesday, headlining a rout on Wall Street after the Fed projected a much slower pace of interest rate cuts in the coming year. The sector was also rattled by profit-taking after a strong run-up over the past week. 

The NASDAQ Composite slid 3.6%, its worst day since late-July. 

Wedbush said this sell-off presented a “buying opportunity to own tech winners poised to play in a robust AI Revolution into 2025,” in a note released on Wednesday evening. 

The brokerage noted that while the Fed and the prospect of trade tariffs under incoming President Donald Trump still heralded some “bumpy days,” the overall outlook for tech and risk-on assets still remained bullish. 

Wedbush said its 2025 playbook remained the same, having recently forecast an at least 25% upside for tech stocks in 2025. Webdush also expects AI-related capital spending to surpass $2 trillion in the next three years. 

The Trump administration is expected to roll out more AI initiatives that will benefit major players such as Microsoft Corporation (NASDAQ:MSFT ), Amazon.com Inc (NASDAQ:AMZN ) and Alphabet Inc (NASDAQ:GOOGL ). 

Tech stocks such as Palantir Technologies Inc (NASDAQ:PLTR ) are also expected to benefit from AI initiatives from the Department of Defense. 

Wedbush said Japanese tech giant SoftBank's (TYO:9984 ) recent announcement of a $100 billion investment in the U.S. was “just the beginning” of more U.S.-centric initiatives to boost AI development. 

The brokerage stated that a leadership change at the Federal Trade Commission was also likely to boost dealmaking activity in the coming years, especially for the technology sector.  Tesla remains biggest beneficiary of a Trump presidency 

Wedbush reiterated that Tesla Inc (NASDAQ:TSLA ) was poised to be the biggest beneficiary of the upcoming Trump administration, and expects faster regulatory approvals for Tesla’s full self-driving and autonomous ambitions. 

“We believe a Trump White House helps unlock the $1 trillion of autonomous/AI value to Tesla's stock as autonomous/FSD is accelerated starting in 2025 and a key tailwind for Cybercab timing,” Wedbush analysts said. 

Musk’s growing influence in the White House is expected to drive this trend. 

 

Source: Investing.com