Labor Shortage to Shift Stock Market Sector Allocation, Predicts Fundstrat
According to Fundstrat, a decadeslong labor shortage is expected to shake up the sector allocation of the stock market. The firm’s cofounder and head of research, Tom Lee, believes that the technology sector will eventually make up more than 50% of the S&P 500. This projection is based on historical data that shows technology stocks outperforming the S&P 500 during periods of extended labor shortages, such as in the 1950s, 1960s, and 1990s.
Technology Sector Expected to Make Up 50% of S&P 500, says Fundstrat
Fundstrat’s chart overlaying the performance of technology stocks relative to the S&P 500 with data on labor shortages and surpluses suggests that the technology sector will eventually account for over 50% of the S&P 500. This projection is driven by the expectation of a new labor shortage in the coming years. As technologies like automation and artificial intelligence play a bigger role in filling the gap left by fewer workers, technology companies are expected to see increased business, leading to higher stock prices.
Automation and AI to Play Key Role Amid Labor Shortages, says Fundstrat
Fundstrat highlights the importance of automation and artificial intelligence in addressing the global labor shortage. The firm believes that technology capable of acting autonomously on the physical world is needed to solve the shortage. As businesses seek to offset the lack of available workers, the demand for such technologies is expected to accelerate. This increased demand will benefit tech companies, ultimately leading to higher profits and stock prices.
Technology Stocks Set to Outperform S&P 500, Predicts Fundstrat
Fundstrat predicts that technology stocks will go “parabolic” again in the coming years, following a new labor shortage. The historical data on the outperformance of technology stocks during labor shortage periods suggests that this trend will continue. The firm expects technology stocks to outperform the broader market, including the S&P 500, as automation and artificial intelligence technologies become more prevalent and necessary in addressing the labor shortage.
Labor Shortage to Boost Technology Demand and Profits, says Fundstrat
Fundstrat anticipates that the forecasted labor shortage from 2015 to 2047 will benefit technology stocks. As businesses seek to offset the labor shortage, the demand for technology solutions is expected to increase. This increased demand will drive up profits for tech companies and lead to higher stock prices. Currently, the information technology sector accounts for about 30% of the S&P 500, but this allocation is expected to rise as the demand for technology solutions intensifies.
Analyst comment
Positive news: The labor shortage is expected to benefit the technology sector, with technology stocks predicted to outperform the S&P 500. As businesses turn to technology solutions like automation and AI to offset the shortage, the demand for these technologies will increase, leading to higher profits and stock prices for tech companies. The technology sector is expected to eventually make up more than 50% of the S&P 500.
