Investors are looking to invest in U.S. and China giants. Strategists told CNBC that they should be cautious as these companies face many challenges.
The investment bank said large customer tech companies like Amazon and Facebook are in the sunsetting phase.
The head of global and Asian strategy at Macquarie Capital, Viktor Shvets, talked about this phase. He said that investors must be very careful when they approach companies like Meta or Alphabet. He explained that, in his view, they are sunsetting. They’re suffering from several issues. He also mentioned other companies like Apple and the Chinese e-commerce platform Alibaba.
On Thursday, Shvets told CNBC’s “Street Signs Asia that the current headwinds might include significant political and social pressure.
He said that investors should be cautious about these large digital platforms. He added that there are a lot of opportunities and profitable opportunities in the rest of the tech industry.
In recent years, both American and Chinese tech giants have come under regulatory scrutiny.
Chinese authorities decided to crack down on its tech companies in the past year, introducing anti-monopoly and data protection areas.
Shares of Alibaba, Tencent, and Didi sold off last year. The Hang Seng Tech index is still down more than 45% compared to 2021.
Last year, in the U.S., President Joe Biden signed a new executive order to crack down on anti-competitive practices in Big Tech, among other sectors.
Next-generation tech chances
The world will witness the transition from second-generation technologies to third-generation. The question is: Which companies will survive this transition?
Analysts say that they have learned in those transitions that only one or two companies make it through. So, for example, Microsoft is the only major tech company to move from the first generation to the second. The question remains: which one of those companies do you think has the greatest opportunity or possibility or capacity to transit?