Veteran bull Ed Yardeni says many tech stocks look super-cheap, and are a good dip-buying opportunity as the Fed ramps up rate hikes

• Ed Yardeni said a lot of tech stocks look awfully cheap, and are good dip-buying opportunities.
• Aggressive rate hikes are coming, but corporations are flush with cash — and that will prop up markets, he said.

Tech stocks look cheap, and now is the right time for dip-buyers to swoop in, according to veteran strategist Ed Yardeni.

A sell-off in US government bonds and stocks intensified after Federal Reserve Chair Jerome Powell signaled Monday the central bank is prepared to act even more aggressively to tackle inflation. Investors are now pricing in slower US economic growth and an end to the easy-money policy of the last two years.

But Yardeni said he didn't think Powell's comments "killed" the market, and he believes investors are hunting for bargains.

"Technology looks awfully cheap to me," he told CNBC in a Monday interview. "There's a lot of cheap technology stocks, so I think there's opportunities."

The S&P 500 index peaked at 4,796 on January 3, but is down 6% from that level as investors grapple with Russia's war in Ukraine and tightening central-bank policy. By comparison, the tech-heavy Nasdaq is down 11.2% so far this year.

Tech companies like PayPal, Netflix, Zoom Video, Facebook parent Meta are all more than 35% lower in the same period.

"This correction we've had since January 3rd has brought buyers in," Yardeni said. "I would call them dip-buyers, or correction buyers."

Energy, commodities, and financials are other promising sectors in the current environment, according to Yardeni, who predicted last year the S&P 500 will surge to 5,000 by the end of 2022.

The veteran strategist thinks the "Fed put" — the belief the central bank will step in to curb the stock market's decline — is done.

"Even if we had a real big tantrum in the stock market, the Fed's just got too big a problem with inflation to cave in," he said.

Goldman Sachs considers Powell's comments as a sign the Fed will hike interest rates by 50 basis points in both May and June, a prediction Yardeni agrees with.

"The Fed's going to have to continue to raise rates no matter what. It's not going to give us easy credit conditions to keep the market going higher," he added.

But one positive sign is that corporations are flush with cash — meaning that share buybacks, dividend distribution, and M&A activity will be strong, he said.

"They've raised over $2 trillion in the bond market over the past three years," he said. "They've refinanced a lot of their debts at record low interest rates."

"I think all those areas will continue to prop the market."

Read More: Goldman Sachs says these 23 stocks offer the most impressive opportunities for profit growth ahead as inflation chokes corporate margins across the board