17/05/2023

Technology stocks may appear expensive but fund managers argue they offer growth at a time when many companies will struggle to lift their earnings.

“The strongest platforms with global scale win most customers and disrupt the old world regional competitors. The strong get stronger in an internet enabled globalised world.”
That’s why Hyperion likes Amazon.com. Mr Samway said US retail sales totalled $US5 trillion ($6.8 trillion), but e-commerce accounted for only $US600 billion or 11 per cent of the total.
Jack Ma’s Alibaba is about 14 times the size of the largest offline retailer in China. David Rowe
He noted that e-commerce accounted for about a quarter of retail sales in China, suggesting plenty of room for Amazon.com to grow.
“You can draw your own conclusion about how far Amazon’s market share could rise from here. The number is substantial.”
Amazon.com also offers exposure to the growth of cloud computing. Mr Samway said the market had grown at a compound rate of 45 per cent over the past five years.
“It doesn’t take long for the market to become a trillion dollar market given the existing players’ total revenue is around $US86 billion.”
“You can see the potential for all the major players. You don’t need to steal market share when the total addressable market is so large and the four winners will take most.”
Hyperion is also upbeat on the outlook for electric car maker Tesla, which it reckons could lift production to three million cars a year in “no time at all”.
Antipodes Partners Jacob Mitchell says Alibaba will profit from the rise of the Chinese consumer.  Brendon Thorne
“But we’ve never been interested in just another car company,” Mr Samway said.
He said 3 million cars would add tens of thousands of megawatts of battery storage a year sitting in cars in consumers’ garages.
“The storage will be available eventually to the grid as a virtual power plant and offer services to the energy market such as frequency regulation, grid support, reserve capacity and time shifting.
“The substantial opportunity for Tesla is to dominate that virtual power plant and energy storage market through a first mover advantage.”
Antipodes Partners chief investment officer Jacob Mitchell is backing Alibaba’s ability to profit from both the rise of China’s one billion lower income consumers and the 340 million wealthier consumers.
Alibaba is well positioned as it is about 14 times larger than the largest offline retailer in China.
“It is a platform which we think has a lot of latent pricing power. The average take rate, which is the percentage of sales that ends up in Alibaba’s revenue line, is roughly 4 per cent.
“That’s quite low for a dominant platform. In other parts of the world those take rates are averaging roughly 15 per cent. “