Tech-tastic

It might well go down as the quote to frame the frothy period of COVID induced lockdown. Akin to Citi CEO Chuck Prince’s “keep dancing” quip, that so summed up the moody housing kerfuffle of late 2008. On Microsoft’s Q2 earnings call, Satya Nadella, said: “We’ve seen two years’ worth of digital transformation in two months”. As those who had never heard of Zoom, or grocery shopped online, will now know only too well. Some COVID era habits will be temporary, but many others are here to stay; and it is possible that we’re at the bottom of the second innings in a massive, decade-long investment cycle in cloud technology. What is stunning, in the context of an already gargantuan stock market presence, is the role the big five – Microsoft, Apple, Amazon, Google and Facebook – will play in shaping this digital future. From virtual reality to HealthTech, to digital advertising, automation, e-commerce and the cloud, the big are only going to get bigger. And yet, such is the scale of the digital opportunity, there will be many other businesses that will emerge as a money-making play on the tech-trade. Businesses that are currently misunderstood, or with hidden assets or visionary, fleet-footed management. Look no further than streaming which has initiated a structural shift in digital entertainment, and where gaming is set to perhaps become, the dominant form of media consumption in years ahead. Previously niche investments, games developers – such as Electronic Arts – are now seeing it like Babe Ruth on a hot streak, aided by the roll out of uber-fast broadband. T-Mobile has spoken of seeing eye-popping speeds of 300-400 mega bits per second in areas where they are pushing out 5G.  Game on, indeed. The digitalisation of payments has also seen a gear change in adoption, playing to the likes of Paypal and others. And there are many, many more, plenty of which will be found in hitherto ‘non-tech’ companies. Morgan Stanley write there are now more software engineers outside of Silicon Valley, than in it. A trend that is likely to increase post-COVID. The buzz, for investors, is to find out which companies will be the winners in what is likely to be, a very different world.