June 28, 2023

(FURTHER UPSIDE IN TECH IN THE SECOND HALF OF THE YEAR)

June 28, 2023

 

Hello everyone,

With all the talk about recession, everyone is now wringing their hands anxiously and moving a lot of their funds to cash.

I know cash is a position too. But long term it is not a great place to leave your funds.

Although the return on the cash is attractive now, returns from stocks far outweigh cash in the long run.

Try not to get caught up in the day-to-day movements of the market. It will make your head spin.

And remember, this time of year the market usually takes a rest – just like a lot of people do. So, don’t be surprised if you see a sell-off or consolidation movement.

The second half of 2023 is likely to see a broadening of the tech rally as investors consider the consequences of the $800 billion AI spending wave on the horizon and what it means for the software, chip, hardware, and tech ecosystem over the next year.

We could see tech stocks up in the second half by 10%-15%. The Technology Select SPDR and the Communication Services Select SPDR, which contain most of the AI plays, are up more than 30% in the first half of the year so far.

Favourites going into the second half would have to be Microsoft and Nvidia, which are up 40% and 189%, respectively, so far this year.

 

 

From 2024 onwards, the AI boom really kicks in.

In 2024, it is estimated that AI IT budgets could comprise up to 8% - 10% as opposed to 1% in 2023.

Also worth considering are Salesforce and C3.ai.

Have a great week.

Cheers,

Jacquie