There could be more broader opportunities in technology, according to one fund manager in the space.
HyunHo Sohn, manager of the £17bn Fidelity Global Technology fund, thinks there could be more on offer than the Magnificent 7 stocks which drove markets in 2023.
He said technology stocks have continued to perform well into 2024 but there has been a split across the sector.
Sohn said so far large caps have "significantly outperformed" small caps with semiconductor stocks delivering returns.
The fund manager said some technology businesses are being affected by macro economic conditions but artificial intelligence seems to still be performing well.
He added most stocks which are viewed as AI winners are now priced at a premium making them less attractive to some investors.
“Looking beyond the Magnificent 7, IT consulting, data infrastructure, and cloud computing are under-appreciated long-term beneficiaries of the AI era," he said.
"Payment services and networks are also essential parts of the technology stack for e-commerce and omnichannel retail.
"Companies with the right scale and technology advantages will be able to capitalise on these long-term growth opportunities. On-demand media and music streaming are also still under-monetised, but industry leaders are well-positioned to benefit from further consolidation."
For the rest of 2024, Sohn anticipates the technology theme will broaden further including opportunities in cloud infrastructure and sub sectors including IT and communications equipment which have attractive valuations.
Sohn said: "The structural story of the tech industry still stands, but a discerning bottom-up stock-picking investment approach will be critical throughout the rest of the year.
"There are many opportunities available in the tech sector for disciplined investors, the key is in picking companies with solid growth prospects combined with valuation discipline.”
tara.o'connor@ft.com
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