2023’s market rally continues to center itself on the big tech comeback with certain themes exhibiting strength like artificial intelligence (AI) and cloud computing. While these themes can offer traders short-term opportunities, they can also persist in the long term as growth plays.
With all the focus on interest rates and inflation, it isn’t stopping the growth of cloud computing. Research data suggests that subsectors of tech will continue to witness exponential growth in the next few years.
“No longer an emerging trend, Gartner predicts public cloud service and user spending to grow nearly 22%, totaling more than $597 billion in 2023, up from $491 billion in 2022,” an E-Week article said, noting that the report data also mentioned that “75% of organizations will utilize a cloud-driven digital transformation model by 2026.”
High interest rates certainly stifled big tech in 2022 with gloomy forecasts on spending as companies looked to slash their budgets amid high interest rates. Given the macroeconomic forces weighing on not just technology, but all sectors, investment in cloud computing as well as AI doesn’t appear to be waning.
“The economic uncertainty may factor into IT budgets and buying decisions, but this doesn’t seem to be slowing down investment in the cloud,” the article added. “In fact, going forward, generative AI will be a major factor that drives many organization’s tech stack purchase decisions.”
Leverage These Cloud Computing & AI ETFs
Traders looking for opportunities in cloud computing can look to the Direxion Daily Cloud Computing Bull and Bear 2X Shares ETFs (CLDL), which seeks 200% of the daily performance of the Indxx USA Cloud Computing Index. The companies included in the index are involved in the delivery of computing services — servers, storage, databases, networking, software, analytics, and more, over the internet — more broadly referred to as “the cloud.”
With cloud computing strength spilling over into AI, traders can also use the Direxion Daily Robotics, Artificial Intelligence & Automation Index Bull 2X ETF (UBOT) as an additional play. The fund seeks daily investment results equal to 200% of the daily performance of the Indxx Global Robotics and Artificial Intelligence Thematic Index, which aims to provide exposure to exchange-listed companies in developed markets expected to benefit from the adoption and utilization of robotics and/or artificial intelligence, including companies involved in developing industrial robots and production systems, automated inventory management, unmanned vehicles, voice/image/text recognition, and medical robots or robotic instruments, as determined by the index provider.
For more news, information, and analysis, visit the Leveraged & Inverse Channel.