The company recently raised its revenue forecast for 2026 to at least $66 billion, beating analysts’ expectations.
The recent decision by the US Federal Reserve to cut interest rates by 50 basis points has attracted the attention of investors and market analysts, who are now weighing the implications for different sectors and individual stocks.
The move, which was widely anticipated, has significantly impacted financial markets, as explained by Kingsley Jones, chief investment officer at Sydney-based firm Jevons Global.
Jones noted that the rate cut has helped support the market. “There was a concern that such an aggressive move by the Fed could alarm investors, leading them to believe that the central bank was aware of problems that had not yet emerged. However, the decision was well communicated and met the market’s expectations," Jones said.
In this environment of falling interest rates, Jones has chosen to steer clear of the tech sector, which has seen explosive growth over the past decade, including the recent boom in artificial intelligence (AI). “While the tech sector has had a great decade, we believe earnings momentum is slowing,” Jones said.
One example of this slowdown is semiconductor giant Nvidia, which has consistently underperformed analysts. “Investors, both U.S. and global, have gained a lot from tech stocks, but now we see a steady shift of capital into other sectors,” Jones added.
There is a clear sector rotation underway, with an increasing focus on traditionally defensive sectors such as utilities and healthcare. These sectors are gaining traction due to more attractive valuations relative to tech, as well as a declining interest rate environment.
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One of Jones’ favorite stocks is UnitedHealth, one of the largest health insurers in the United States. The reasoning behind this is related to the enormous healthcare spending in the United States, which accounts for a significant portion of the country’s gross domestic product (GDP).
The pharmaceutical sector is also in Jones’ sights, with Jones citing AbbVie Inc. as an attractive stock for its growth prospects. AbbVie, a major biotech company, is known for its drug pipeline and strategic acquisitions, making it an attractive option in a defensive investment environment.
In the consumer sector, Jones singled out two key companies: Walmart and Costco. Both are considered good picks in a declining interest rate environment, due to their stability and prominent role in the retail market.
Despite his general skepticism about the technology sector, Jones cited Oracle as one of the few exceptions. The software and cloud solutions giant, long seen as lagging behind other industry giants, recently raised its 2026 revenue forecast to at least $66 billion, beating analysts’ expectations.
Oracle has benefited from AI, particularly its cloud infrastructure, and Jones has chosen to increase his position in the company, seeing it as a key player in the development of AI-related technologies.
Kingsley Jones’ investment strategy reflects a cautious and balanced view, focusing on defensive sectors that can benefit from falling interest rates and ongoing sector rotation. While the technology sector, which has dominated for more than a decade, is starting to show signs of slowing, other sectors such as healthcare, consumer goods, and utilities offer safer investment opportunities in this time of economic transition.
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The information and considerations contained in this article must not be used as the sole or main basis for making investment decisions. The reader retains full freedom in his or her investment choices and full responsibility in making them, since only he or she knows his or her risk appetite and time horizon. The information contained in the article is provided for information purposes only and its disclosure does not constitute and should not be considered an offer or solicitation to the public to save.|
Original article published on Money.it Italy 2024-10-18 07:19:00. Original title: Scordatevi Nvidia. L’unica azione tech da comprare ora è questa
