GinsGlobal : Investing in tech: the time has come. The strong dollar is certainly one of the causes of the negative results recorded by the quarterly reports of big tech in recent weeks.
However, one can expect the strength of the green currency itself to be a strong barrier to the galloping inflation in the US. In fact, we expect inflation to start falling to 7 or even 6 percent by the beginning of the new year. This factor could therefore stimulate a slowdown in the path of raising rates and therefore be able to help stocks in the sector in question.
Another aspect that will benefit the tech industry is given by the upcoming results of the mid-term elections, where the forecasts are that the Democrats will no longer have control of all three levels of US power, as Republicans are expected to take control of the House of Representatives. A possible defeat of Nancy Pelosi could mean a policy less inclined to government spending, a factor for which the Biden administration has been strongly criticized in the last two years. Although it is not clear who the Senate will go to, with the two parties going head-to-head in the polls, a Republican policy – usually more business-friendly – in the House would be viewed favorably by Wall Street, bringing momentum for the sector and in particular for big tech, as the Biden administration will no longer enjoy the support that allows it to favor expansionist policies.
As subsectors to pay attention to today, in a bearish market context that allows access to undervalued stocks, there is certainly Streaming, where I remember interesting trends such as that of Disney + which recorded for the first time a number of subscribers higher than those of Netflix, reaching 14.4 million subscribers in the third quarter, for a total of 221 million.
A second sub-sector to observe is gaming, which is one of the trends of the moment. The largest operation within this sector took place last March with the acquisition by Microsoft of Activision-Blizzard-King for 75 billion dollars. An operation that has openly shown Microsoft’s momentum towards the game branch.
A third important trend underway is that of the inclusion of the Cloud in different fields of investment: from cybersecurity, to healthcare or the world of Insurance (the latter two considerably involved as a result of the impact of the pandemic). For this reason, our expectations on the Cloud are, by 2025, for a doubling of current levels. A momentum also confirmed by the recent movements of the American administration, where both at federal and state level we are witnessing an insertion of structures on the Cloud. The latest news on this issue comes from the Pentagon. In fact, the US Department of Defense recently signed a contract worth $1.5 billion with Lumen Technologies, a provider of cloud services and cybersecurity. The adoption of cloud infrastructure by this entity demonstrates the strength of the cloud model in terms of reliability and security. The vision of the US military is to develop a technological capability by 2030. It is clear that the cloud is now a standard in technological development for the future, to keep in mind in this time of turbulent markets.
The original article can be found in ETF World