• The bottom is in for tech stocks this year, according to a note from Wedbush analyst Dan Ives.

• Ives believes the Fed finally "ripped the band-aid off" with Wednesday's rate hike and now investors can refocus on fundamentals.

• "We believe the tech sector is as oversold as we have seen in the last five years and we would strongly be buying," Ives said.

The Federal Reserve "ripped the band-aid off" when it raised interest rates on Wednesday for the first time since 2018, and that's a green light to buy tech stocks, according to Wedbush analyst Dan Ives.

In a Wednesday note, Ives outlined his view that the bottom is likely in for tech stocks this year as they are now as oversold as they have been in the past five years. That creates a solid opportunity for investors to start accumulating shares in various high-quality areas of the tech sector.

"We would strongly be buying cloud, software, cybersecurity, chips, and stalwart tech names led by FAANG with Apple our clear favorite," Ives said. Wedbush's internal checks with enterprise spending suggests the ongoing digital transformation to technology solutions is accelerating in 2022, not slowing.

That's despite the fact that "investors have run for the exits and sold the tech sector indiscriminately across the board painting all tech names with the same brush," Ives said.

Much of the selling in the tech sector was exacerbated by expectations of higher interest rates and the potential for economic disruptions related to Russia's ongoing attack against Ukraine. The Nasdaq 100 entered bear market territory for the first time since March 2020 on Monday, falling more than 20% from its record high on a closing basis.

While Ives is bullish on enterprise and cloud tech stocks, he does advise caution towards owning the well-known work-from-home stocks that saw sky-high valuations amid an initial boom in business during the pandemic. Some of those names, including Docusign and Zoom Video, have fallen more than 80% from their record highs.

Instead of bottom fishing for the most beaten-down tech stocks, investors should focus on buying the winners, according to Ives.

"We believe large cap tech will outperform small caps and a rotation to the tech stalwarts with defensive business model and high free cash flow," Ives said.

The top software names to own at current levels include Microsoft, Oracle, Adobe, Salesforce, according to Ives. Meanwhile, "the cloud shift will disproportionally benefit a handful of vendors which will be led by Microsoft, Amazon (AWS), and Google (GCP), followed by Oracle and IBM among others," Ives said.

Ultimately, Ives sees Apple shares as the best tech stock to buy following it's recent sell-off of about 18%.

"We view Apple as both a Rock of Gibraltar defensive tech name as well as the best 5G tech play in the market with a massive product cycle that is gaining more steam along with its valuable services business which is being undervalued by the Street," Ives said.

But with the Fed expected to raise the Fed Funds interest rate six more times in 2022 to just under 2%, Ives acknowledges there is likely to be more volatility ahead. Still, that volatility shouldn't lead to a new low in tech stocks, according to Ives.

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