The technology sector is set to deliver a greater number of investment opportunities this year as a result of software and service companies using artificial intelligence (AI) to monetise their offerings.
“In 2025, we expect opportunities in the tech sector to broaden out. Tech companies with recurring revenue models and high customer retention should remain resilient in uncertain macro environments, and the non-AI hardware and semiconductor cycle, which has been significantly depressed, should normalise in 2025,” Fidelity International global cross asset specialist Lukasz de Pourbaix revealed.
De Pourbaix highlighted the evolving nature of the sector and how it will constantly challenge the idea of perceived winners of the global AI ecosystem.
More specifically, he pinpointed businesses positioned to generate durable, long-term earnings from the AI thematic as those providing the best investment opportunities.
“We are finding opportunities in companies that are underappreciated beneficiaries of AI along the value chain. These companies are well positioned to generate durable earnings stream, with AI as a long-term growth driver, but which are not reliant on a rapid pace of adoption,” he noted.
“It includes IT service companies that could help with AI deployment, cloud service providers that could generate annuity revenue streams once customers build AI workloads in the cloud, software companies that could monetise AI functionality and customer service software and business process outsourcing companies with domain expertise.”
According to Pourbaix, the tech sector provides numerous investment opportunities unconstrained by geography or particular market conditions.
“Technology provides opportunities across all sectors, industries and geographies. This theme benefits from long-term structural trends, including shifts towards cloud computing, industrial software, artificial intelligence and gaming, among others,” he said.
“Tech deployment is taking place across all areas of economic activity and has the potential to create value across a diversified pool of businesses. In saying that, we still believe it is important to have a bottom-up investment approach to tap into these opportunities as they arise.”
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