Daniel Ives of Wedbush Securities remains extremely bullish on tech stocks, pointing to the enormous benefits of his exposure to cloud services as millions more people continue to work from home.
See here: Microsoft’s cloud service revenue soared 39% in the first three months of 2020, compared to the same period in 2019. CEO Satya Nadella noted “two years of digital transformation in two months.”
In a recent note to clients, Ives predicted that technology stocks could rise another 20% to 30% before peaking. But that will require another quarter of strong growth in a tough economic environment.
Investors are becoming increasingly nervous about the meteoric rise in tech stocks. According to a survey conducted by Bank of America this month, a record 74% of fund managers said technology stocks are a “crowded” trade, indicating they see the sector as overvalued and may start looking for opportunities elsewhere. places.
The Nasdaq CBOE Volatility Index, which tracks volatility expectations for the Nasdaq 100 Index, has also started to pick up since early June.
Global battle for technology could cost $ 3.5 billion
As tensions between Washington and Beijing continue to mount, Wall Street warns that a new technological Cold War could cost the industry billions of dollars.
The latest: In a recent note to customers, Deutsche Bank Apjit Walia’s technology strategist said supply and demand disruptions, along with the construction of a “technology wall” forcing companies to create two sets of standards to operate in the United States and China, could cost companies $ 3.5 billion in the next five years.
The loss of Chinese demand for Western tech products is particularly worrying, Walia said. China represents 13% of the revenue of the technology sector worldwide, totaling approximately $ 730 billion per year, he said. Moving supply chains out of China and efforts to comply with very different regulatory systems in China and the United States would also be costly.
On the bench: TikTok has been repeatedly attacked by US politicians who say it is a threat to national security due to its ties to China, claiming that the company may be forced to release information to the Chinese Communist Party.
TikTok has struggled to distance itself from China. He recently hired an American CEO and argues that he stores Americans’ data on servers based in the United States.
Take a look at this space: While the US administration would be within its rights to ban downloads on federal government devices, it is not so clear how it could compel states or the private sector to do the same. But it may not be necessary. At least one company, Wells Fargo, has already told employees not to install TikTok on the company’s devices.
Until next time
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