Goldman Sachs The Markets
What's ahead for tech stock valuations?
Jan 5, 2024
This podcast discusses the surge in value of the megacap tech sector in 2023 and explores market opportunities in 2024. They cover the impact and future of AI, including scalability and real-world applications. They also discuss the potential opportunities in smaller tech companies that offer exposure to secular growth themes and trade at a discount to larger cap peers.
06:39
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Quick takeaways
- Earnings revision cycle supported tech stock prices in 2023 due to cost-cutting and increased profitability.
- In 2024, there is an opportunity to explore AI's potential in enhancing productivity and transforming daily life.
Deep dives
Technology in 2023: Earnings revision and AI wave lead to tech stock recovery
In 2023, two dominant themes shaped the technology sector. First, companies recognized the need to cut costs and increase profitability due to rising interest rates and lower valuations. This led to an earnings revision cycle that supported stock prices. Second, the AI wave emerged, with chat GPT being a popular application. Now, there is a secular growth theme around AI and a focus on restrained investments, which contributed to the recovery of tech stocks. These trends played a crucial role in the performance of technology in the past year.
