Interview
The New Tech Investing Landscape
- Investors are currently underexposed to mid-cap tech companies in the U.S. and emerging geographies, creating a massive opportunity set expected to become attractive as rising interest rates prompt position building.
- Public cloud infrastructure and cell phone adoption are projected to drive wide-scale innovation across software, digital payments, e-commerce, and internet platforms.
- A new generation of SaaS companies is expected to evolve to provide adaptable, flexible architectures for the core enterprise resource planning market, enabling businesses to iterate rapidly.
- Structural shifts toward digital infrastructures, including the transition away from cash and checks, are viewed as persistent long-term trends expected to accelerate as vaccines facilitate economic recovery from lockdowns.
- Merchant acquisition companies are anticipated to be the first to accelerate as small businesses resume transacting, while major payment platforms are expected to benefit from the resumption of cross-border travel and goods movement.
- Significant investment opportunities are expected outside the U.S., particularly in China's group buying and mega app platforms, with models expected to replicate across Latin America and Southeast Asia for rapid scale.
- Advertising expenditures are projected to rebound for travel and other pandemic-affected sectors to drive demand, accompanied by tremendous innovation in virtual and augmented reality mediums.
- While some tech pockets are overvalued, credible opportunities to buy transformational companies at attractive valuations are expected following recent market resets, prompting active managers to accumulate shares of firms likely to beat estimates.
- Sector disruption is expected to occur at the expense of established vendors, necessitating a focus on identifying winners and losers, with the coming decade projected to see more acceleration and disruptive change driven by AI, machine learning, semiconductors, and digital payments than the prior 30 years.
- Global U.S.-China tensions are expected to remain an ongoing issue requiring analysis of a range of outcomes, while regulatory scrutiny regarding market power is projected to continue for mega-scale platform vendors in the U.S., Europe, and China.