24.01 Liontrust Views Winter 2024 - Flipbook - Page 9
OOM?
were oversold in 2022 and they are
leaders in AI. We are only five minutes into
the football game in the new technology
cycle driven by AI and we expect these
companies to deliver strong returns over
the coming years.”
Dowey points to the performance of
technology companies in the Russell
1000 index (which represents the 1000
top companies in the US by market
capitalisation) – of 132 technology
companies in this index, 100 beat the
overall Russell 1000 median stock return of
8.5% in US dollar terms last year.
And Dowey believes the good news is
that there is still lots of potential ahead for
investors looking to move into technology
stocks, including in small technology
companies, although as always, investors
should do their homework and ensure they
understand the potential risks too. “Looking
forward, we expect a lot of differentiation
within small and mid-cap technology stocks,
unlike the late cycle market of 2020 and
2021 when almost everything went up.
“Smaller technology companies that are
creating great value for customers and
focused on making, rather than just spending
money, should do very well and could easily
outperform the Magnificent Seven.”
But Dowey warns: “However, those that
have not adjusted to tougher financial
conditions in the past couple of years could
keep on going down.”
With the world an increasingly digital place,
it seems certain that technology will continue
to evolve and the success of many firms may
be driven by their ability to innovate and
adopt fast-moving technologies such as AI.
For investors, this could be an opportunity to
diversify to invest in the future.
T H R E E C O M PA N I E S T O WAT C H
The Liontrust Global Innovation team discuss the merits of three technology stocks
ServiceNow – One of the best positioned
technology companies for the years
ahead is ServiceNow, which manages
companies’ IT software pile, tidies their
mess and enables them to reap the
gains. The company helps its customers to
generate huge productivity growth from AI.
Wise – While the UK is significantly
behind the US in technology companies,
a notable exception is Wise. Based in
London, the company takes an innovative
approach to disrupt banks’ exorbitant
fees for sending money across borders.
Moderna – This healthcare company is
using AI to speed up drug discovery and
is at the forefront of AI’s application in
pharma. It has tasked its entire workforce
to become fluent in AI.
LIONTRUST VIEWS – WINTER
9
