- Technology stocks in the FAANG, cloud software, and cyber security themes could rally 10%-15% by year-end with a Biden presidency and Republican Senate, according to Wedbush.
- This regime is the “Goldilocks election outcome” for tech stocks as a Biden presidency will ease US-China technology-policy issues while the Republican Senate decreases the prospect of major antitrust regulation.
- Wedbush listed Apple, Microsoft, Salesforce, and Zscaler as top tech stock picks.
A Joe Biden-led White House and Republican Senate is the “Goldilocks election outcome” that will send technology stocks higher into year-end 2020, according to Wedbush.
In a Monday note, a team of analysts led by Dan Ives said that tech stocks could rally another 10%-15% by the year end, with FAANG stocks, cloud software stocks, and cyber security names leading the way.
Ives said his favorite stock within FAANG is Apple, as the tech giant has launched a 5G enabled iPhone 12 and has a services business that thrived during the pandemic. He’s also bullish on Amazon, Facebook, and Alphabet, writing that all of these companies listed tailwinds in the September quarter.
Within the cloud software sector, Ives likes Microsoft and Salesforce. He also said Zscaler is his favorite cyber security name.
Wedbush’s bullish call for tech stocks under a divided government is largely pegged to the US’s relationship with China. Under a Biden presidency, Wedbush expects the US to take a more friendly tone with China’s technology and policy issues and ratchet down tensions across the enterprise and consumer technology space. Ives added however, that it’s unlikely the longstanding issues around piracy and intellectual property theft will go away.
“With a Biden presidency now official, tech investors should expect a ratcheting down of US/China tensions and the ‘decoupling path’ of the Cold Tech war, which is a bullish sign for Apple and semi stocks looking ahead,” Ives said.
A tech risk under a “Blue Wave” election outcome was increased antitrust regulation from the Senate. Now that the Senate appears Republican, chances of major legislative changes to antitrust law are off the table, said Ives.
“While the DOJ suit vs. Google and potentially others on the horizon remains a long-term threat with litigation likely to go for years, for now the Beltway vs. Big Tech regulatory environment looks less onerous than it could have in a Blue Wave scenario,” Ives said.