The Nasdaq at 19,000, Apple and Microsoft market caps of more than $3 trillion, and a pervasive metaverse, particularly after Apple releases its much-anticipated Apple Glasses.
These are just a few of the top ten predictions made by Wedbush Securities analyst Dan Ives and his team for the coming year.
The influential Wall Street tech analyst laid out his base case for how tech will look at the end of 2022 in a note to clients on Tuesday, despite concerns about what the Federal Reserve may do to rein in inflation and current unknowns about Omicron.
“While many are throwing in the towel on this multi-year historic tech rally heading into 2022, we view this near-term sell-off (along with Omicron fears) as just a painful digestion period, with the Street now factoring in a tighter Fed and constrained valuation framework for tech stocks,” Ives and his team said, noting they remain “firmly bullish on tech stocks for 2022.”
Here are Ives’ top tech predictions for next year:
Apple will finally unveil its AR/VR headset Apple Glasses in the summer of 2022, which will result in another major growth catalyst for the stock as the company’s golden Cupertino installed base is further monetized.
The digital transformation of enterprises and consumers is driving our 2022 year-end target for NASDAQ of $19,000 per share. While the Street will be more focused on valuation parameters, the underlying growth prospects for the tech sector are 2x-3x normalized/historical patterns.
The hype surrounding the metaverse will give way to reality as more tech titans such as Facebook, Apple, Alphabet-owned Google, and Microsoft invest billions of dollars in this theme over the next year. We anticipate a lot of M&A activity in this space.
The cloud arms race will continue for the next decade, with Amazon, Microsoft, and Google leading the way, followed by Oracle and IBM. According to our estimates, 43 percent of workloads are currently in the cloud, and by the end of 2022, this figure will have surpassed the 50 percent mark as more enterprises/governments migrate to the cloud.
Based on our recent checks, we believe cybersecurity budgets will increase by 21% in 2022, representing a roughly 100 basis point YoY increase from a strong 2021. Zscaler, Tenable, CyberArk, Varonis, Sailpoint, Fortinet, and Palo Alto Networks are our favorite cyber security plays for 2022.
M&A activity will increase in 2022 among both strategic and financial buyers. Cerence, Matterport, Varonis, Rapid7, and Sailpoint are our top five tech M&A candidates for 2022.
The Asian chip shortage will significantly ease in 1H22, removing a major overhang from the tech sector. We believe that Apple and chip makers are the best entry point bets to benefit from this key dynamic easing.
The regulatory environment, both inside and outside the Beltway, will pose a threat to FAANG names due to anti-trust and monopolistic concerns. We believe that these regulatory issues will primarily result in fines (led by the EU) and limited M&A opportunities, rather than structural break-ups of these tech titans.
Given the massive scale and scope of Beijing’s unprecedented regulatory crackdown, China tech remains a very dangerous investing space for global investors. The unpredictable actions of Beijing will result in more global investment dollars shifting from China tech to US tech stocks in 2022.
In 2022, Apple and Microsoft will both surpass the $3 trillion market cap threshold.