Everyone knows that we have dealt with record levels of inflation over the last year. This has put a strain on consumers and raised questions for investors. While the state of the economy has caused people to avoid investing in many industries, technology is one of the few that could still be worth it. How could that be, and what specific subcategories of the industry should investors target? Let’s find out.
The first component to this is that inflation rates seem to be leveling out a bit. Gas prices are falling and the rate of inflation was at 0.3% in July, compared to 0.7% in June. There has been much speculation from experts about whether these decreased rates are sustainable or not. The only thing we know for sure is that inflation will be higher over the next decade than it was in the last decade. So when investing, it will be important to pick companies within industries that are equipped to succeed in that environment. As mentioned before, technology is one of the main players.
What types of technologies are thought to be well-equipped for this? The ones that will or already seeing price drops while increasing effectiveness. Some examples are robotics and clean energy. Cybersecurity will also likely be a good investment. Security breaches reached a new record in 2021. More people will find that service to be essential over the next decade. Other good areas to target are clean commercial heating and air conditioning. Technological advancements will allow companies within those industries to operate efficiently through efficiency savings.
Artificial intelligence is another tool that should provide large benefits through pharmaceutical developments. AI will give the ability to eliminate a large number of experiments that are unlikely to work, which cuts a ton of costs.
As you can tell, there are a ton of ways that technology can help companies run more efficiently, leading to more use. The most notable takeaway is that it is pretty much a certainty that companies will spend more on technology for the foreseeable future. Why? Because companies can operate in more efficient ways to combat the inflation we are seeing right now. While that is the main reason that technology will be a good investment, it is not the only reason. For example, companies will spend more on cybersecurity, but consumers will as well. People are always thinking of more ways to steal information. For that reason, cybersecurity might be an industry that investors should put at the top of their list of targets.
Some people might be hesitant to invest in anything right now due to the state of the economy, we hope we have quelled some of those concerns for you. Even if you aren’t in a position to invest in anything right now, this knowledge could be something to keep in the back of your mind. It could help you out in the next couple of years.
Photo Credit: tec_estromberg
