Since October last year, we believe that the cloud computing and software sector in the US stock market is dominated by defense, and Microsoft is the best
In October 2021, "five questions and five answers overseas: global regulatory process and future direction", we proposed that under the circumstances of the increase of US bond interest rate and the reduction of QE, the discount rate would rise by 1%, and the typical high-growth US software company might fall by about 10% more than value stocks, and the discount rate would rise by 2.6% (that is, without considering the risk premium, the risk-free interest rate would rise from 1.4% to 4%), The corresponding SaaS company with 44 times of PS, a typical high growth in the United States, has a decline space of 40%, while the typical technology giant with 12 times of PS has a decline space of about 20%. When there is still high uncertainty in inflation and shipping prices, and technology giants are generally facing a new round of regulatory cycle, in megacap, Microsoft, as the beneficiary of inflation, has continuously improved the competitiveness of cloud computing, and the income and risk return ratio are the most attractive (2021.08.25 / 2021.10.29 / 2022.01.19 and other Microsoft comment reports).
NASDAQ retreated sharply after two years, and high growth software companies in the United States generally retreated by about 50% from the high point
Since the beginning of the year, the decline of the S & P 500 index and NASDAQ is mainly caused by valuation. The contraction of the Fed minutes further triggered the market discussion on tightening, and the probability of raising interest rates continues to rise. Major stock indexes in the United States fell sharply after the beginning of the year. As of the closing of January 23, us time, the S & P 500 fell 7.7% and Nasdaq fell 11.99%. After the opening on January 24, affected by the further tension in Ukraine, the Russian RTS once fell by 10% and the NASDAQ once fell by more than 4%, but closed red. At present, the market unanimously expects the Federal Reserve to raise interest rates for the first time in March and about three times in the whole year. Since November last year, with the increase of the interest rate of 10-year US Treasury bonds and the contraction of risk premium, the valuation of typical high growth technology companies (such as cloudflare and Shopify) has fallen rapidly, close to 50% of the market value of the highest point.
Under the sharp correction, we believe that caution needs to pay attention to the gradual emergence of investment opportunities
On Friday, January 21, a large number of options in US stocks were delivered centrally, which partially contributed to the decline of the index. Microsoft and Apple will start to announce their results on January 25. Most technology giants will spend the quiet period before the performance. If they restart the repurchase, they may provide some incremental capital support. Judging from the rapid upward market fluctuations of interest rates in the past five years, the impact time of the upward 61bps of the 10-year nominal interest rate on the median is six months, and the correction range of Nasdaq 100 is 10.4%. We believe that the market has largely reflected the upward pressure of the discount rate.
The valuation pressure of SaaS sector has been partially digested, the wave of data intelligence industry is still continuing, and there may be better investment opportunities at the end of the first quarter
The industry wave leaders are still growing rapidly, and the cost performance may gradually highlight under the valuation correction: we believe that in cloud computing, the fastest growth in 20 years and the first half of 21 years is digital links (slack, zoom), etc., and the whole year of 21 years is the strong recovery and growth of online advertising, Digital links will continue to drive the storage, data processing and data intelligence requirements for unstructured data (such as IOT sensor data, voice data and video data). These requirements are expected to accelerate the application in the fields of network, security, digital collaboration, it automation, storage computing, platform-as-a-service and so on. We believe that the foreshadowing of 20 and 21 years will boost the continuous growth of platform layer decoupling and data intelligence in 22 years. With the continuous and rapid growth of cloud computing, in the US cloud computing and SaaS companies, we suggest paying attention to the growth and valuation matching opportunities of corresponding high growth companies (HCP, GLBE, twlo, net, shop), etc. Among the technology cloud computing giants, we suggest to continue to pay attention to Microsoft (from the comprehensive and in-depth layout of consumer applications, enterprise software, hardware facilities and basic engines, and the drivers and beneficiaries of enterprise digitization), as well as Amazon (the development route of long-term e-commerce business is clear, the scale effect of cloud computing is increasing, and the pressure on short-term costs and capital expenditure is alleviated).
Risk warning: macroeconomic risk, enterprise it expenditure demand risk, SaaS company's customer acquisition cost and R & D cost rise risk
