Technology investing "doesn’t come cheap" at the moment but there are ways to access the opportunity with valuation in mind, agree wealth managers and investors.
Dan Smith, senior equity analyst at Canaccord Genuity Wealth Management, said: “The problem with investing in technology at the moment is that it doesn’t come cheap. The US’s so called ‘Magnificent Seven’ are experiencing some of the highest company valuations of all time. And the timing issue is a tricky one for investors to negotiate – when do you get in and when do you get out again whilst trying to maximise your return on investment? The holy grail.”
Storm Uru, who jointly runs the Liontrust Global Technology fund, said that while the scale of the opportunity available to investors is considerable, and in his view in its infancy, he is wary of being caught out by excessive valuations.
With this in mind he says he maintains a target price on the stocks he owns, and if the stock exceeded that price he would sell it.
The target price only moves higher if he believes the fundamental reason for owning the has changed, and the investment case has improved.
Smith says he tends to look at the companies “that facilitate AI”, rather than the AI companies themselves, as he believes valuations in that area are more attractive.
Uru believes that many of the companies which benefit from AI, rather than being the AI companies themselves, and this is an area he is finding increasingly interesting.
