Tech stocks could fly 25% higher in the next year, Daniel Ives says.

“The risk-off trade for tech has been a painful one for tech investors this week as worries around high valuations, bubble fears, rotation trade, rising yields and a focus on reopening plays take center stage,” Ives said.

But, according to Ives, the digital transformation is just getting started and will last a number of years among companies in cloud, cybersecurity, e-commerce and 5G. These subsectors are the life of the tech party, with consumer and enterprise demand catalyzing a “multiyear growth boom” ahead, the analyst said.

Though collaboration-software groups like Zoom ZM, Microsoft Teams, Slack WORK, and Citrix CTXS will see “moderating growth” into 2022, many chief executives have told Wedbush that 30% to 40% of employees could remain working remotely in some form. This will prompt companies to “rip the Band-Aid off and go aggressive” with cloud transformations, Ives said.

Investors should use the current market weakness to ensure that the following companies are in their portfolios, according to Ives: Apple AAPL, Microsoft MSFT, digital document specialist DocuSign DOCU, AI pioneer Nuance NUAN, and cybersecurity groups Zscaler ZS, Palo Alto PANW, and SailPoint SAIL.

Across the wider sector, Wedbush predicts that tech stocks will move at least 25% upward in the next year. That will be driven by big names Facebook FB, Amazon AMZN, Apple, Netflix NFLX and Google parent Alphabet GOOGL GOOG, as well as cloud and cybersecurity stocks, despite the recent selloff, Ives said.

More broadly, Ives said that Uber UBER and Lyft LYFT — “disruptive tech recovery names” — remain Wedbush’s favorite “reopening plays,” with profitability on the horizon and a massive surge in food delivery.

And while tech regulation is a long-term risk, “it still remains a Goldilocks environment for tech stocks with the Biden administration,” according to Wedbush. Ives sees President Joe Biden as likely to ramp down tensions in the “Cold Tech War” brewing between the U.S. and China, as well as encourage cybersecurity initiatives.

Market bears will come out of hibernation to warn investors that the tech boom and bull rally is over, Ives said. Wedbush believes this is “a golden opportunity to own the secular tech winners for the next 12 to 18 months at compelling valuations given some of these selloffs.”

The markets

Stocks continued Wednesday’s big slide DJIA SPX COMP to move move deeper into the red on Thursday. European stocks UK:UKX DX:DAX FR:PX1 were mixed but mostly lower while major Asian indexes JP:NIK HK:HSI CN:SHCOMP tumbled more than 2%.

The chart

If you think bonds have been bumpier than usual…you’d be right. Our chart of the day, from Marshall Gittler at BDSwiss, shows just how volatile the Treasury market is right now. Gittler charts the MOVE index, which is like the bond market version of the VIX index for stocks. Volatility in stocks is near normal while foreign exchange is a little calmer than usual.

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