Forget the sell-off - Tech stocks have a 'springboard for growth' into 2024 that Wall Street has underestimated

• Tech stocks have a "springboard for growth" into 2024 that's underestimated, Wedbush's Dan Ives wrote.
• The analyst cited artificial intelligence, the cloud, cyber security, and a rebound of digital ad spending.
• Strong third-quarter tech earnings will be a "sneak preview" for the sector, he added.

Tech stock investors may be white-knuckled from the pressure of mounting headwinds, but the sector is bound for growth next year, Wedbush Securities' Dan Ives wrote.

The upbeat view comes as the Nasdaq has suffered a 6.6% tumble so far in the month of September alone as US Treasury yields have soared to 16-year highs.

"Our bullish stance on tech is unchanged despite market fears," he wrote on Wednesday. "Our view of tech stocks is that the transformational growth around AI, cloud, cyber security, and rebound of digital ad dollars will create a springboard of growth into 2024 that is currently being underappreciated by the Street."

For now, equity investors are grappling with a hawkish Federal Reserve, which has indicated another interest rate hike before the year-end. Meanwhile, the surge in 10-year Treasury bond yields have provided a solid alternative to the stock market.

As markets broadly declined, the S&P 500's seven leading tech stocks also dropped considerably, falling from their July peak of nearly 70% gains.

But Ives expects the Fed to cut rates in 2024, while predicting a soft landing will pull down Treasury yields. He added that third-quarter earnings reports will be a "sneak preview" of next year's rebound.

But this week, the sector was met with further uncertainty when the Federal Trading Commission launched an antitrust lawsuit at Amazon, accusing the e-commerce giant of monopolistic policies.

Ives noted that the FTC has a long history of trying to rein in Big Tech, citing the actions taken against Meta, as well as the failed attempts to block Microsoft's acquisition of Activision — though on Wednesday, the FTC revived the complaint.

"The Amazon FTC antitrust deal, while creating scary headlines, we do not expect this multi-year cage match to be successful and ultimately the bark will be worse than the bite for the negative ripple impact to Big Tech which is our view as a Wedbush Tech Team," he said.

Other analysts have been less confident in tech's continued bull run. This week, investor Rob Arnott noted losing confidence in the AI narrative on which the tech rally has been built. He also warned of a coming hard landing which will bear down on expensive growth stocks.