Taking stock of 2023: Tech Update

  • 21 December 2023 (5 min read)

Key points

  • Technology continues to drive a diverse set of long-term growth opportunities
  • Active management expertise can help identify key trends at the right time
  • Digital economy, Robotech and Metaverse themes offer a wide choice of opportunities for investors 

The volatility of 2023, driven by unforgiving rate hike cycles, geopolitical distress, and climate crises, might have felt like one long, bleak midwinter. However, global equities appear to be ending the year with more cheer, even if companies still face headwinds in the months ahead. Importantly, investors with longer-term growth outlooks continue to be able to pursue the exciting potential offered by both new and persistent themes and mega-trends found throughout the technology sector. 

Tech leading the equity recovery in Q4

The continued decline in US inflation led Fed Chairman Powell to suggest that interest rates may have peaked (but at the same time, not entirely ruling out the need for a further increase). Market participants are increasingly confident that there will be no further rate rises and are now focussed on the potential cuts due in 2024. This has driven a material decline in bond yields in recent weeks, which was meaningfully positive for investor sentiment for equity markets and notably growth equities, with sectors that have been the most under pressure responding the most positively.

Global equity markets have rallied and while all sectors within the MSCI All Country Index provided a positive return for November, the technology sector was the clear winner during the month as an initially lacklustre earnings season gradually improved.

Read on to discover how current market sentiment factors into the latest outlooks of three of our core thematic equity strategies.

Digital Economy

The expectation that interest rates may have peaked in the US, whilst the first cut could come as soon as May 2024, has proved particularly supportive for the ‘Data & Enablers’ sub-theme.

These are typically technology companies who are providing the tools and expertise to enable both traditional businesses to migrate into digital ones, and new businesses to adopt a digital-first strategy. We have seen good performance from several of our enterprise software investments including Workday, Salesforce and ServiceNow after reporting better than expected results. All three companies have mentioned that they are currently benefitting from the introduction of Artificial Intelligence (AI) products in their offerings.

Whilst we continue to note the difficult market backdrop, we are buoyed by the good results of our investments, with company management teams executing well in a challenging economic environment. The decisions made to reduce costs have been helping support cash generation and profit growth.


Whilst economic uncertainty persists, we are seeing emerging signs of softness appearing in the labour market – albeit it remains historically very strong and there continues to be labour shortages that present a real challenge for businesses. For instance, in the manufacturing space or warehousing space, we see fewer workers – particularly younger demographics – that are willing to do these kinds of jobs, given the nature of the roles and the salary. As a result, companies facing labour inflation and shortages are increasingly incorporating technology and automation in their processes to increase efficiency and productivity with their existing/shrinking workforce. In simple terms, we anticipate that labour shortages and wage inflation are substantial drivers of automation demand over the next few years. As labour costs go up, the payback periods become quicker from introducing automation, meaning that more and more areas are considered for automation.

The US is trying to reinvigorate its domestic manufacturing via infrastructure spend and capital expenditures (CAPEX). This is important geopolitically as it keeps US jobs and intellectual property within the US; it is also important for supply chains as it secures stock within the country, after the disruption witnessed post-COVID-19. Government support has evolved over the past few years, whether it be the Trump Administration – with tariffs in the US China trade war – or more recently with the Biden administration and the CHIPS Act signed to ramp up and re-shore US technology, such as domestic semiconductor manufacturing. US president Biden also passed the Inflation Reduction Act (IRA) allocating a lot of spend for more domestic US manufacturing, focussed on key technologies. As a result of tariffs, incentives and reducing the risk of supply chain issues, companies are investing again in the US - and this comes with technological sophistication, robotics and automation.


Recently we have seen significant progress being made on the AI topic. We expect Generative AI to be a key accelerator. More broadly for the Metaverse strategy, quite a number of companies in the Metaverse are already using AI in their products/services. What is exciting is the future direction which could provide more processing power, more powerful AI, and interesting applications to enhance experiences in the Metaverse.

In October 2023, the US Federal Communication Commission agreed to open a segment of the 6 GHz band spectrum for wearables such as augmented and virtual reality headsets, which could allow devices to connect directly to each other without needing a Wi-Fi network1 . We view this as a significant change which could help enable new applications for wearables. This is also a good illustration of proactive collaboration between regulators and the industry to shape the future.

A recent study published by Bain show that there are compelling reasons for continued optimism about the future of the Metaverse, which is already here and in use across various industries, such as gaming, healthcare and manufacturing. The report projects that the Metaverse market size could reach $700 to $900 billion by 2030, with key opportunities across virtual experiences, content-creation tools, app stores and operating systems, devices, computing and infrastructure.2  We believe we are the early stages of a long-term trend which spans opportunities in almost every aspect of our lives, and expect innovation to continue at a rapid pace. Whilst markets may continue to be volatile, we believe that the long-term opportunities driven by the Metaverse remain intact and we are likely to see an increasing number of companies presenting Metaverse-related products or services.

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The connected consumer and future of automation provide attractive, long-term growth opportunities. Macro events such as rate cycles will have some effect and short periods of volatility will need to be weathered, but this is not new, as seen during previous bouts of volatility such as in 2017 following the Trump election, the 2018 US/ China trade war, and more recently the pandemic which in many ways has benefitted the long-term trajectory of the technology sector. Whilst markets may continue to be volatile, we believe that our investment philosophy around identifying long term themes and the companies that will benefit from these themes remains intact despite the near-term challenges. This philosophy gives us the freedom to look through short-term market volatility and invest in exciting, disruptive technology trends.

Stock/company examples are for explanatory/illustrative purposes only. They should not be viewed as investment advice or a recommendation from AXA IM. These examples do not represent all of the securities purchased, sold or recommended for the client’s accounts. No representation is made that these were or will be profitable.


No assurance can be given that our equity strategies will be successful. Investors can lose some or all of their capital invested. Our strategies are subject to risks including, but not limited to: equity; emerging markets; global investments; investments in small and micro capitalisation universe; investments in specific sectors or asset classes specific risks, liquidity risk, credit risk, counterparty risk, legal risk, valuation risk, operational risk and risks related to the underlying assets.

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