JPMorgan Says Tech Investment to Power 2022 Market

(Bloomberg) -- Stock investors looking to 2022 should keep technology in mind not just as a growth play, but as the engine for better profit margins across the whole market, says David Lebovitz of JPMorgan Asset Management.

Investors next year are likely to see “investment spending kick in as a key driver of economic growth,” the firm’s global market strategist said in an interview Tuesday on Bloomberg TV’s Surveillance. “A lot of that has to do with technology.”

The Nasdaq 100 Index, filled with computer, software, Internet and other technology stocks, is up more than 26% this year, slightly outpacing gains in the S&P 500. Lebovitz says the effect in 2022 may be much broader than individual companies’ returns.

“The important thing to recognize about the role technology can play, obviously as a sector itself it’s been quite profitable, it can enhance profitability in the other sectors where it begins to show up,” he said. “Investors are willing to pay for the earnings that technology, whether it be a sector or an investment, the earnings that that is able to drive.”

Lebovitz says company executives are talking about the much-discussed supply chain problems from the pandemic, as well as other challenges such as wage inflation, costs of raw materials and a lack of workers in some industries.

“But another thing you are hearing from management quite a bit is a focus on automation, efficiency, productivity,” the strategist said. “So I think next year, companies can continue to focus on running their operations in a relatively lean way. It drives that constructive narrative next year.”
 

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