The key to getting big tech stocks to rise again lies in a combination of two factors, according to Goldman Sachs’ veteran tech analyst Kash Rangan. Rangan believes that for the tech sector to see significant growth, there needs to be a steady stream of interest rate cuts from the Federal Reserve along with a surge of innovation that drives earnings growth above 20%.
At the recent Goldman Sachs Communacopia & Technology Conference, Rangan expressed his bullish outlook on companies like Microsoft (MSFT) and Salesforce (CRM). He emphasized the importance of innovation in areas like artificial intelligence (AI) to boost customer upselling and monetization efforts.
Rangan highlighted how the convergence of innovation and lower interest rates can create magic for tech stocks. As investors await the Federal Reserve’s next monetary policy decision on September 18, all eyes are on the potential rate cuts that could stimulate the economy.
Goldman Sachs chief economist Jan Hatzius suggested that a 50 basis point rate cut is possible, given the high current policy rate in the US. Meanwhile, innovative developments in AI are already starting to emerge, with companies like Salesforce and AMD unveiling new AI-powered solutions.
Salesforce CEO Marc Benioff mentioned the upcoming release of AI-powered digital agents for customer service automation, while AMD’s Lisa Su revealed a roadmap for new AI chips through 2026. These advancements signal a significant shift towards AI-driven technologies in the tech sector.
Despite recent market volatility and concerns about economic growth, tech stocks are poised for a rebound with the right combination of innovation and monetary policy support. As investors navigate through the current landscape, staying informed about the latest technology trends and market developments is crucial.
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