Goldman Sachs says that in order to make large-cap tech stocks "regain their momentum" and soar again, two factors need to work together; According to the bank, these two factors are the steady rate cuts by the Fed, combined with "explosive" innovation leading to corporate profit growth exceeding 20%.
According to Kash Rangan, a senior technology stock analyst at Goldman Sachs, two factors need to work together to make large tech stocks 'rebound': steady interest rate cuts by the Fed, coupled with 'explosive' innovation that drives profit growth of over 20%.
He said on Monday, "We must restore the industry's growth rate from 11% to 20-30%. To do this, we must have new innovation."
Rangan is bullish.$Microsoft (MSFT.US)$And.$Salesforce (CRM.US)$He said that the technology industry must make progress in the field of artificial intelligence (AI), such as improving customer sales and achieving profitability.
"When you combine this kind of innovation with lower interest rates, miracles happen," he added.
Due to concerns about slowing economic growth, investors have taken profits in popular artificial intelligence trades, with technology stocks being the main focus. Since September, it has fallen about 5% in total.$Nasdaq Composite Index (.IXIC.US)$Investors are also concerned about the slowdown in artificial intelligence spending, partly due to the underwhelming second-quarter performance report of chip giant.$NVIDIA (NVDA.US)$Goldman Sachs analyst Toshiya Hari said, "Recent performance of Nvidia stocks has not been good, but we remain bullish on the stock. First of all, the demand for accelerated computing remains very strong. We are inclined towards large-scale enterprises."
公司）超大规模企业中，寻找分析师刚刚才熟知的认可。”$Amazon (AMZN.US)$Google and other companies are spending a lot of time on it, but you will see that the scope of demand is expanding to a wider range of companies, and even sovereign nations. $Microsoft (MSFT.US)$ But you will see that the scope of demand is expanding to a wider range of companies, and even sovereign nations.
The Fed cut interest rates.
Currently, investors' attention is mainly focused on the Federal Reserve because it is almost certain that the central bank will cut interest rates at the September meeting.
Goldman Sachs Chief Economist Jan Hatzius stated on Monday, "I don't rule out the possibility of a 50 basis point cut, but a 25 basis point cut is more likely."
"I think there is a good reason for a 50 basis point cut. The current federal funds rate is the highest policy rate among G10 countries, even though the fact is that the United States has made more progress in terms of inflation than most G10 economies," he added.
AI innovation
As for another factor, it may take more time, although new signs of innovation in the AI growth story have begun to emerge.
Salesforce co-founder and CEO Marc Benioff announced last month that the company is preparing to release an AI digital agent to help businesses automate customer service. Benioff stated that Salesforce will charge on a per-conversation basis.
Meanwhile, $Advanced Micro Devices (AMD.US)$ Lisa Su, CEO, stated on Monday that the supercycle of artificial intelligence has just begun and AMD will aim for Nvidia's dominant position in the market by accelerating the launch of high-performance AI chips.
"AI is a bigger cycle than I anticipated five years ago, and we are now making a big bet for the next five years," she added.
Editor/Rocky