Ives: Top tech stocks to watch amid geopolitical tensions

Wedbush analyst Dan Ives named ten technology companies as potential safe havens amid rising Middle East tensions and AI-related market jitters. He points to robust business models and exposure to cybersecurity, defense, and AI-driven growth as reasons to favor these names for defensive positioning.

Analysis

A defensive shift into cybersecurity, defense primes, and AI infrastructure is not just a short-term flight to safety — it alters capital flows and supply-chain incentives across the next 12–36 months. Vendors that provide recurring security SaaS and government-certified stacks see revenue resilience and higher gross retention, which can compress equity volatility even as broader tech earnings wobble. At the same time, sustained geopolitical friction accelerates onshoring and sovereign-capex (fabs, edge data centers), mechanically increasing order visibility for ASML/TSMC suppliers and tightening lead times for advanced packaging and substrate suppliers.

Near-term market moves will be dominated by risk-off flows (days–weeks) and headline sensitivity to escalation or sanctions; medium-term (3–12 months) drivers are budget cycles (defense procurement, cloud capex) and AI chip cadence; long-term (1–3 years) is the capex-heavy buildout of domestic semiconductor capacity and hyperscaler AI farms. Key reversal triggers: a credible diplomatic de-escalation, broader risk-on liquidity (lower rates/securities repo relief), or an AI growth disappointment that re-prices hardware multiples. Conversely, a new tranche of export controls or a demonstrable cyber incident tied to state actors would materially re-rate the defensive cohort.

Trade execution should reflect two realities: (1) much of the defensive premium is already in prices — use option structures to cap cost; (2) correlations will spike, so hedge beta. Focus position sizing on asymmetric payoff structures (call spreads, conditional longs) and keep a 1–3% absolute portfolio allocation per idea, scaling into confirmed budget/capex prints.

Contrarian risk: the market may underweight idiosyncratic execution risk in smaller cyber names and overpay for “de-risked” cloud incumbents that face margin pressure from a capex shift to custom AI stacks. That suggests being selective — favor companies with sticky, contractual revenue and visible government/procurement ties rather than headline-safe brands alone.

Key Decisions for Investors

• Long cyber SaaS via CRWD: buy a 4–9 month call spread (e.g., near-ATM buy / +15–25% OTM sell) sized to 1–1.5% of NAV. R/R ~3:1 to 4:1 if adoption/renewals beat; protect cost vs outright call premium.
• Pair trade — long NVDA vs short META (or another ad-exposed platform): allocate 1.5% net long NVDA and 1% short META equity or buy 9–12 month NVDA call spreads vs short-dated (1–3 month) META puts funded by selling covered calls. Timeframe 3–9 months; R/R ~2:1 if AI hardware demand persists while ad growth slows.
• Defense tilt: initiate a 6–12 month bullish position in LMT or RTX via 9–12 month LEAP call spreads (~1% NAV). Expect asymmetric upside on program wins and limited downside via spread financing; hedge with 0.5% NAV in long-dated tail puts on broad tech (QQQ) during heightened escalation.
• Data-center/infra capture: overweight EQIX (or local data-center REIT with hyperscaler exposure) with a 6–12 month horizon by buying equity or 9-month call spreads (1% NAV). Monitor capex announcements; take profits on a 20–30% move and trim if hyperscaler guidance disappoints.