Investment Bank Wedbush: AI Sell-Off Creates Buying Opportunity, Valuation Divergence Emerges in Software and Cybersecurity Sectors

Wall Street Journal Finance APP has learned that Dan Ives of investment bank Wedbush Securities stated that the current sell-off in tech stocks presents buying opportunities in the AI revolution, especially in cybersecurity and software sectors, which have been unfairly treated by the market.

In an interview, Ives described the current environment as a “thrilling moment” and a “safe-haven trade,” but he remains convinced that the core logic of tech stocks remains intact, and this turbulence may last only a few weeks rather than months.

He said during the interview, “AI phantom trading. The sell-off in software stocks continues to be one of the most disconnected-from-fundamentals trades I’ve seen in my career.”

He pointed out that companies like CrowdStrike (CRWD.US), Zscaler (ZS.US), Palo Alto (PANW.US), and Check Point (CHKP.US) are highly attractive cybersecurity targets. He noted that the industry has performed well during recent market turmoil, and given the current tense geopolitical landscape, this performance is likely to continue.

Beyond cybersecurity, Ives remains optimistic about broader software companies, including Salesforce (CRM.US), ServiceNow (NOW.US), Oracle (ORCL.US), and Microsoft (MSFT.US). He observed that the software sector has recently shown relative strength and hinted that after a recent event by Anthropic that helped shift market sentiment, the sector may have already bottomed out.

In semiconductors, the analyst acknowledged that safe-haven trades have hit the industry hard, even though strong earnings reports have failed to boost stock prices.

Despite Micron (MU.US) posting explosive quarterly results and Nvidia (NVDA.US) trading sideways for months, he argued that considering long-term AI development, these stocks are still worth holding. He pointed out, “In terms of the AI revolution, the demand-to-supply ratio is 12 to 1,” emphasizing that the industry is only in its third year of an eight- to ten-year infrastructure expansion.

Ives recommended a “barbell strategy” to cope with current volatility, balancing defensive and offensive positions within the tech sector.

He warned investors not to fall into “dystopian views” during market stress and emphasized that geopolitical and macroeconomic headwinds are normal, and the tech industry has previously weathered such storms. He concluded, “I firmly believe that tech stocks will ultimately continue to lead the market higher.”