Outlook 2024: Opportunities in technology

THE information technology (IT) sector had an eventful 2023, with underpinnings that we believe set it up well for another year of potentially strong performance in 2024.

Four key factors that we believe can drive returns for the sector are:

• An inflection in revenue and earnings growth after several quarters of pandemic-era demand digestion;
• Resilient secular demand for digital transformation and the “application” phase of generative artificial intelligence (AI);
• A more stable inflation and interest rate environment; and
• Reasonable valuations on a growth-relative basis.

Sector growth poised to outperform the broader market

We’ve seen the IT sector become more disciplined and profitable over the past year, as the cost of capital increased and growth decelerated following outsized Covid-era demand. After this period of IT budget-cutting, we believe businesses need to reinvest or risk falling behind on their digitalisation initiatives.