Investment strategies are shifting towards a tech stock rebound.
JPMorgan's Global Head of Market Strategy, Dubravko, suggests going long on stocks that have performed strongly over the past 12 months and shorting those that have performed strongly over the past 3 months, essentially betting on tech stocks to outperform energy and defensive sectors. He believes that the upstream of the AI supply chain presents attractive buying opportunities after a period of concentrated selling; large cloud computing service providers have limited upside potential in the short term, but are expected to benefit in the medium term from improved pricing power, profit margins, and cash flow due to tighter computing power supply. Low volatility stocks are becoming less attractive; if continued allocation is desired, healthcare is the top choice, followed by utilities and consumer staples. Consumer cyclical stocks remain weighed down by high oil prices, borrowing costs, and housing shortages, but the long-term outlook for the apparel, food and beverage, and retail sectors remains positive. (JPMorgan report, November 9)
