In 2020-2025, Cybersecurity, AI, and Big Data will be the three tech sectors to boom, says UBS [Marketwatch - Jan 5th, 2022]
Today, the largest stocks in the S&P 500—Apple, Microsoft, Alphabet, Amazon (AMZN), and Tesla—account for 23% of the index, which the UBS strategists say is a very high weighting relative to history.
"But while this heavy weighting means these stocks will have a big impact on overall index returns,we no longer see them as the best place to look for outsize returns in the tech sector,” said Haefele and his group.
“We expect more value to come from artificial intelligence, big data, and cybersecurity.”
In terms of cybersecurity, the Swiss bank sees spending heading to the sector amid a broad rise in cybercrime. In 2021, nearly 330 million people experienced cybercrime, and spent some 2.7 billion hours dealing with the aftermath, the UBS strategists highlighted, citing Norton’s 2021 Cyber Safety Insights Report.
“We expect the industry devoted to preventing such attacks to grow by an average 10% during 2020–25 thanks to steadily higher enterprise IT spending and the greater adoption of cloud security,” Haefele’s team said. “Cybersecurity is also one of the most defensive segments withinIT. Spending on cybersecurity has limited downside.”
In the period of 2020-2025, UBS sees the broader tech sector notching mid-to-high single-digit revenue growth a year. For the three thematic sectors of AI, Big Data, and Cybersecurity, the Swiss bank expects a comparably higher 10% average yearly revenue growth, withaverage yearly earnings growth of 16%.
