Focus on AI, big data and cybersecurity in tech volatility, says UBS

  • The tech volatility should prompt investors to focus on the ABCs of the sector – AI, big data and cybersecurity stocks, according to UBS.
  • These themes within technology offer high potential long-term growth, the global wealth manager said.
  • The Nasdaq Composite corrected, down more than 10% from its all-time high.

Investors should adopt a “thematic approach” to investing in the

technology sector

face to face


that left the Nasdaq Composite in a correction as shares of giants such as Apple and Microsoft took a beating, UBS Global Wealth Management reported on Friday.

Investors are wondering if it’s time to join the group in the face of Nasdaq Composites tumble, UBS said. Through Thursday, the index is down 12.7% from its all-time intraday high of 16,212.23 on November 22. A correction is considered a loss of 10% or more from a recent high. Tech stocks were stung in part by a surge in Treasury yields on expectations of a rapid pace of interest rate hikes by the

Federal Reserve

This year.

The Nasdaq sold off during Friday’s session and among the big names in the index, Apple this year has fallen around 8% and Microsoft around 11%. The moves follow big gains in 2021 when Apple was up around 35% and Microsoft soared 52%.

“Instead of counting on another period of mega-cap outperformance, investors should take a thematic approach, including fundamental technologies such as AI, big data and cybersecurity – the ABCs of technology,” said Mark Haefele, chief investment officer at UBS Global Wealth Management. , said in a note.

Investors would be well served to seek the “high potential long-term growth” of AI, big data and cybersecurity stocks and to rebalance their portfolios to avoid overexposure to mega-caps, he said. .

Haefele noted that the PHLX Semiconductor Sector Index fell more than 10% this week despite “tailwinds” from the potential passage of a $52 billion bill in Congress to increase chip supplies. , Intel’s plan to spend at least $20 billion to build a manufacturing plant in Ohio, and “strong” next-generation lithography sales for ASML.

“Alongside semi-equipment makers, we like some chip foundries, with the bigger players poised to benefit from a structural increase in demand, widening margins and weak two-way revenue gains. numbers over the next few years,” he said.

UBS also highlighted the growth potential of the electric vehicle market with the expected entry of more companies. Sony executives told Reuters it is likely to add new technology partners to its EV project, and UBS said Apple is expected to enter the EV market in the near future.

The wealth management group sees smart mobility becoming a $450 billion market by 2025, three to four times its current size.

“The path to smart mobility will be enabled by a host of technology innovators, including advanced chip and sensor makers, camera leaders, artificial intelligence and cloud providers, and manufacturers. of next-generation EV batteries. We like to pick names in the global EV supply chain, as well as some global automakers with exposure to electric vehicles,” Haefele wrote.

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