This technology focused ETF shows that the US technology-led boom is fully intact. US shares remain attractive, especially those with exposure to the unfolding technology revolution.
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We have a breakout by Amazon.com after an extended period of sideways trading. It is not an explosive breakout but that may come. Just as Apple, Microsoft and Nvidia are battling it out around the $3T mark, Amazon.com is battling with Alphabet/ Google around the $2T market with a number of contenders jostling around $1T.
I have been reading the latest shareholders’ letter for Q1 2024. It is both long and all about innovation. Big as it is Amazon is an incredibly innovative business with big plans.
Today, we continue to operate in times of unprecedented change that come with unusual opportunities for growth across the areas in which we operate. For instance, while we have a nearly $500bn consumer business, about 80pc of the worldwide retail market segment still resides in physical stores. Similarly, with a cloud computing business at nearly a $100bn revenue run rate, more than 85pc of the global IT spend is still on-premises. These businesses will keep shifting online and into the cloud. In Media and Advertising, content will continue to migrate from linear formats to streaming. Globally, hundreds of millions of people who don’t have adequate broadband access will gain that connectivity in the next few years. Last but certainly not least, Generative AI may be the largest technology transformation since the cloud (which itself, is still in the early stages), and perhaps since the Internet. Unlike the mass modernisation of onpremises infrastructure to the cloud, where there’s work required to migrate, this GenAI revolution will be built from the start on top of the cloud. The amount of societal and business benefit from the solutions that will be possible will astound us all. There has never been a time in Amazon’s history where we’ve felt there is so much opportunity to make our customers’ lives better and easier. We’re incredibly excited about what’s possible, focused on inventing the future, and look forward to working together to make it so.
Amazon, Letter to Shareholders, Q1 2024, 30 April 2024
Strategy – Buy Amazon
Amazon is not alone. There are loads of megacaps with great charts including Apple, Microsoft, Nvidia, Alphabet (Google), Meta Platforms, Taiwan Semiconductor Manufacturing, Broadcom and Netflix and the Tesla chart is showing signs of springing to life.
This is great news for a string of ETFs, including QQQ, QQQ3, QQQ5 and other more specifically technology-focused ETFs like XLK and IYW.
Share markets have a spot of summer doldrums but the medium/ long-term outlook is spectacular.
I am not going to tip all the above shares again. Earlier alerts have made subscribers aware of my bullishness. The newest breakout is Amazon.
GenAI is Perfect for the MegaCaps
Why are the big stocks doing so well? An important reason is GenAI. Nobody is better placed than these cash-rich giants with their huge global footprints to spend the money needed to make GenAI happen and to monetise the results.
Share Recommendations
Amazon. AMZN. Buy @ $199.50
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