A subsector within technology presents share investors with a massive long-term opportunity, according to one fund manager.
Munro Partners head of investment Nick Griffin said tech shares have been sold down heavily in the recent rotation to value stocks.
But just because the share price has dipped, this doesn't mean certain businesses won't keep growing earnings.
"Inflation is going to change the re-rating or the de-rating of Amazon.com Inc (NASDAQ: AMZN)," he told a Livewire video.
"Yes, it will change the price we pay, but it won't change the fact that Amazon's earnings will continue to grow in the future. And in the long run, we expect their share price to follow their earnings and ultimately deliver the returns that we're looking for."
Hello, Australia is the crystal ball for the rest of the world
Griffin is particularly surprised by how much the cloud commuting subsector has been sold off.
"It's one of the bigger areas in our fund today," he said.
"They don't look optically cheap, but on cash flow metrics, they actually are not as expensive as what people think."
A major reason for this investor reticence is a post-COVID prediction that northern nations have made — that we Australians already know is completely wrong.
"There's been this assumption — and it's very much coming from the northern hemisphere — that COVID's going to go away and we're all going to go back to work."
Griffin's US and European colleagues have told him cloud computing usage will wane because work-from-home infrastructure won't be in as high demand as last year.
"We can say, look, we're calling you from the future here. We're here in Australia, there's no COVID and no one's going back to work. Work-from-home is somewhat here to stay," he said.
"The digital transformation got accelerated by COVID — and there's no reason to think it will slow down just because COVID goes away."
This is why Griffin reckons there's currently a major stock-buying opportunity for "some of the big winners in the next decade".
"Because it's fairly clear that a lot of these software solutions we're using for it — whether it be Zoom Video Communications Inc (NASDAQ: ZM) or Docusign Inc (NASDAQ: DOCU) or Atlassian Corporation PLC (NASDAQ: TEAM) products are going to be with us for a long time."
One of the beneficiaries from the demand for work-from-home technology, Telstra Corporation Ltd (ASX: TLS), this week announced that it wouldn't force its own 26,000 employees to return to the office.
"There's an opportunity for employers to look forward and create a completely different vision of the workplace rather than trying to hold on to the past," Telstra executive Alex Badenoch told the Australian Financial Review.
"Every single one of our employees can have an element of choice about how they work, when they work and the kind of work they do."
