Large-Cap Tech Trends to Watch

William Blair Large Cap Growth Strategy Co-Portfolio Managers Jim Golan, CFA, and David Ricci, CFA, recently discussed technology trends they’re exploring with Citywire Selector. Long-term secular shifts in semiconductors, cloud-based computing, and fintech provide attractive opportunities.

The team targets companies in industries where profits are growing at least as fast (and preferably faster) than the U.S. economy.

Golan and Ricci told Citywire Selector there has been an increase in the use of semiconductors in a number of areas, such as autonomous vehicles. As a result, the three- to five-year profit growth for the industry looks appealing relative to the overall market.

That’s one important way they differentiate their approach from those of other quality growth investors—the team targets companies in industries where profits are growing at least as fast (and preferably faster) than the U.S. economy.

The portfolio managers also say cloud-based computing is a compelling trend. U.S. corporations are early in the process of outsourcing their data centers to cloud platform providers. As a result, Golan and Ricci think the industry could grow from around $100 billion today to $300 billion to $400 billion over the next three to four years.

The Large Cap Growth team also seeks companies that could benefit from other long-term secular developments. These include the shift from brick-and-mortar retailing to online retailing, the shift from traditional television to streaming services, and the shift from cash to digital payments. Such long-term trends are likely to underpin above-average industry growth, they believe.

“We look at the profit pools within fintech, whether it is the shift towards networking, towards merging and acquiring, or towards digital payment away from cash,” Ricci told Citywire Selector. “The types of companies involved are … all net beneficiaries of this long-term secular shift.”

Read the Citywire Selector article

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