Cyrus Mewawalla, head of thematic research at data analytics and consulting firm GlobalData, said big U.S. tech stocks will shrug off inflation and continue to rise this year, thanks to a number of emerging technologies.
Mewawalla told CNBC’s “European Street Signs” on Monday that if tech companies operate in these areas, they will benefit from the metaverse, Web 3.0, cryptocurrencies and quantum computing.
“If you’re in that space, you’re going to benefit from it almost regardless of the macroeconomic issues,” he said.
The tech-heavy Nasdaq 100 fell nearly 1 percent on Monday. The S&P 500 and Nasdaq Composite fell for four straight days. Stocks have had a rough start to the year as interest rates soar.
Big tech companies are investing billions of dollars in new technologies that have the potential to fundamentally change the way we live and work.
Late last year, Facebook changed its name to Meta to reflect its focus on the so-called metaverse: a virtual world where humans can interact through digital avatars that can be controlled through virtual reality headsets like Oculus. Elsewhere, companies like Google and Microsoft have developed VR headsets, while Apple is rumored to be working on one.
Several tech giants are working on commercial applications of quantum computers, and Meta is planning to launch a cryptocurrency called Diem. So far, most of them have been silent on Web 3.0, known as the next-generation Internet.
Last week, Apple’s valuation rose to more than $3 trillion, making it the most valuable U.S. stock ever and by some accounts the world’s largest tech company. But according to Mewawalla, the iPhone maker’s stock may not grow as much this year as some other big tech companies.
“Apple is probably the least likely to grow from here in terms of maintaining its valuation,” he said. “It has a very, very strong ecosystem and very strong execution. So I see little downside risk. But I see more upside potential in other large tech stocks.”
Apple CEO Tim Cook delivers the keynote address at the 2020 Apple Worldwide Developers Conference (WWDC) at the Steve Jobs Theater in Cupertino, California.
Handout by Brooks Kraft/Apple Inc/Reuters
Asked if Apple would have more surprises this year, Mewara said CEO Tim Cook had “absolutely amazing” over the past 10 years, growing its market value from around $350 billion to $3 trillion .
“But at that time, there was little innovation other than maybe the Apple Watch, whose operating system was actually an extension of iOS,” he said. “Apple TV kind of failed because there wasn’t really a new blockbuster product. Now there’s talk of new blockbuster products, like electric cars. It could be self-driving cars. Smart glasses, and “maybe the Metaverse.” But until we see more evidence, of course Apple is notoriously secretive, it’s hard to tell. “
Meanwhile, Amazon and Google parent Alphabet have the most exposure to regulation, Mewawalla said, adding that they face a wide range of issues including data, privacy, antitrust and copyright. That said, he doesn’t see any “significant” events happening anytime soon.
On acquisitions, Mewawalla said they would be “highly restricted” going forward, adding that new merger laws were being introduced in the UK and other countries to prevent companies from becoming too large and powerful.
“I think the acquisition strategy will have to change and it will have to take into account greater regulatory scrutiny,” he said.
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