Technology

Janus Henderson Portfolio Manager Alison Porter has presented an optimistic outlook for the technology sector in 2025, driven by the ongoing maturation of generative artificial intelligence (gen AI). Porter described AI as the “vampire” that has gained superpowers, enabling the technology sector to capture an even larger share of the global economy.

Key Insights:

• Lengthy Compute Waves:
  Porter emphasized that AI represents a "compute wave" rather than a mere thematic trend. These waves are characterized by extensive investment across all layers of technology, from silicon to applications. The ongoing AI wave is expected to lead to broad disruption and innovation across multiple sectors, echoing the trajectory of previous tech waves like mobile cloud computing.

• Volatility and Investment Patience:
  Investors should anticipate heightened volatility as the AI wave progresses. Infrastructure bottlenecks, such as limited silicon availability, and geopolitical changes, including regulatory shifts, could influence market dynamics. However, these factors also serve as tailwinds for long-term AI development.

• Strategic Stock Selection:
  Porter underscored the importance of active management in navigating the evolving tech landscape. Relying solely on indices or narrow thematic strategies may limit returns, as past performance shows that only a subset of large-cap tech companies have consistently outperformed broader indices.

The Maturation of Gen AI

Despite questions about whether the peak of the AI hype cycle has been reached, Porter believes that investors underestimate the scope and duration of AI's impact. The gen AI wave, already driving advancements in healthcare, transportation, and financial systems, is poised for further growth. With applications like humanoid robots, autonomous agents, and AI copilots yet to reach their full potential, the AI wave’s disruption is far from over.

AI’s Economic Transformation

The integration of AI is expected to accelerate disruption across sectors, requiring businesses to adapt rapidly. From enhanced productivity in traditional industries to transformative changes in payments, healthcare, and clean technology, AI is reshaping the global economy.

Porter noted that AI's trajectory mirrors previous tech waves, where infrastructure investments preceded the widespread adoption of groundbreaking applications. This pattern, combined with the sector’s ability to leverage its balance sheet strength for research and development, positions technology equities for attractive long-term returns.

Conclusion

As AI continues to mature into 2025, it solidifies the technology sector's dominance. Porter advises investors to focus on companies driving disruption rather than those at its receiving end, highlighting the importance of sound fundamentals and active management. In the fast-evolving tech space, patience, strategic stock-picking, and a long-term perspective remain critical to reaping the rewards of the transformative AI wave.

• Tags
• #Business
• #Magazine
• #Lifestyle