Analyst forecasts tech stock rebound of at least 10% and says rate fears will soon pass

Tech stocks seem to be falling off the rails of late, with the Nasdaq Composite slumping Monday to take the benchmark index 7% below its record high.

To closely followed tech analyst Dan Ives of Wedbush Securities, this is just a "white knuckle moment" that will soon pass. Ives says the worries around rising yields and growth stock valuations will give way to a year-end rally of at least 10% in the tech space.

"While the long standing bears will continue to yell fire into a crowded theater on a 20 bps move in the 10-year , we instead focus on the $2 trillion digital transformation opportunity across the enterprise and consumer ecosystem over the coming years that is on tech's doorstep," he said in a note to clients.

"While the valuation debate will continue to be front and center in a rising rate environment, we fundamentally believe the Street is massively underestimating what the tech growth picture looks like into 2022 and thus remain a core tenet of our unwavering tech bull thesis with this another pound the table moment to own tech stocks."

Ives concedes that the pandemic led to "a massive pull forward" in demand for cloud, e-commerce, cyber security and other tech companies. But he said it's way too early to throw in the white towel and said investors should double down.

Apple is Wedbush's favorite of the FAANG stocks, as he cited Microsoft, DocuSign, Matterport and Pegasystems as favorite cloud stocks. In cybersecurity, Wedbush favorites are Varonis Systems, Zscaler, Telos, SailPoint Technologies, Tenable Holdings, Palo Alto Networks (PANW) and Fortinet.