Tech: Find companies at the vortex of innovative trends, equity portfolio manager says
Tech stocks have had quite the reversal this year, with the likes of Nvidia and Microsoft catching the updraft after a lackluster 2022. The outperformance of those names is in no small part due to the ongoing fervor over A.I. and it's potential as a digital gamechanger.
As markets search for indications of the Fed’s next move, Jennison Associates Technology Equity Portfolio Manager Erika Klauer says investors in the space may want to look to companies harnessing "the tools of innovation" that could become more prevalent in the economy. She uses ChatGPT as just one example of the larger generative A.I. push, while discussing the technology's potential impact for the likes of drugmakers and law firms.
“The best strategy now, is to try to figure out which companies are really at the vortex of these extremely innovative trends that we’re beginning to see materialize in early 2023, “ says Klauer.
For more on the tech investment landscape watch Erika Klauer’s full interview here with Yahoo Finance’s Rachelle Akuffo.
Key video moments:
00:00:13 Tools of innovation
00:00:23 A.I. innovation
00:01:02 Best strategy on company selection
Video Transcript
RACHELLE AKUFFO: We've seen the market reaction with every bit of data that's giving them a hint of what the Fed might do-- we have core CPI and PPI, retail sales, consumer sentiment. So as people are looking for short versus long term headwinds at the moment, what are you tracking?
ERIKA KLAUER: Well, you know, I think that the main issue that we really look for are the tools of innovation that are becoming more and more prevalent in this economy. I'll give an example-- for artificial intelligence, a lot of people have talked about ChatGPT. But ChatGPT is really something larger which is known as a generative tool, where you can actually create content out of machine data.
So for example, drug developers can look at reams and reams of data and come up with better tools for predicting what drugs will be effective. Or, alternatively, one can try to create a marketing campaign with input tools using generative AI, and/or lawyers will be able to create legal documents using generative AI. So from Jennison's perspective, we're really a bottom up company and are looking for these trends in the companies that can capitalize on them. So that, I think, is the best strategy now is to try to figure out which companies are really at the vortex of these extremely innovative trends that we're beginning to see materialize in early 2023.
