Invest
Can tech stocks continue to grow?
With some of the largest and fastest-growing companies in the world being technology listed stocks, investors are wondering if the inflated assets can continue to grow.
Can tech stocks continue to grow?
With some of the largest and fastest-growing companies in the world being technology listed stocks, investors are wondering if the inflated assets can continue to grow.

Addressing an adviser lunch in Sydney, global asset management business First Sentier Investors has argued how technology companies in the Australian sharemarket can generate consistent long-term growth for investors despite overinflated prices being driven by the relatively small tech universe in Australia.
First Sentier’s head of Australian equities growth, Dushko Bajic, said the small number of local technology companies that made it through to IPO stage means that the stocks have – to an extent – already proven their worth by the time they are listed.
“In the last two decades, 4,500 companies in the IT industry took series A venture capital investment, but only 75 took four rounds of investment and made it all the way to IPO,” Mr Bajic said.
“Almost half the companies that did make it to IPO ended up being dominant category winners, so the IPO process is essentially a thinning out contest.”

Overpriced or continued growth?
According to First Sentier, the Australian tech sector is showing it could contribute up to $207 billion a year to Australia’s GDP by 2030, which represents a 70 per cent markup from the $122 billion the sector contributed in 2018.
Mr Bajic said the Australian tech sector, which made up only 12 per cent of the top 300 stocks in the market, has often been criticised for its overinflated prices.
Such overinflation has been blamed on local fund managers piling onto the few stocks available to allow them to provide tech exposure for their investors.
But, according to Mr Bajic, there’s still potential for long-term growth through the holding of such stocks.
“Remember when investing: be patient, maintain a long-term focus, and allow the power of compound interest to work for you,” the fund manager said.
Investors who were lucky enough to invest in some of the largest tech companies in the world would be millionaires today due to time in the market and strong growth of the companies.
Despite strong growth in the sector, another common criticism of tech companies was that their enduringly high price to earnings ratios meant investors could not possibly get sufficient growth to justify what they were paying.
“If you look at when Salesforce listed in the US, over the first five years their average P/E ratio was 161 times, and despite that the company went from a price of $4 to $17, so more than a fourfold increase despite carrying a P/E north of 100 times,” he said.
“From 2004 to now, the price has gone up 37 fold from $4 to $148, market cap has gone from US$1 billion to $135 billion, and this is all despite being on an average P/E of 98 times during that entire 15-year period.”
Mr Bajic added that while tech companies could be “overbought and oversold through periods”, investors ignored them at their peril, given they were often generating growth regardless of economic conditions.
About the author

About the author


Stock market
International stocks: Diversifying your portfolio beyond Australia
In an increasingly globalized market, Australian investors have the opportunity to enhance their investment portfolio by incorporating international stocks. Diversifying your investments globally can ...Read more

Stock market
Stock market rally likely to continue regardless of Fed minutes tone, says deVere CEO
The bull run that has propelled Wall Street's major indexes to record highs this month is expected to continue regardless of the tone of the upcoming Federal Reserve minutes, according to Nigel Green, ...Read more

Stock market
US stock rally driven more by valuation growth than earnings, leaving tech names vulnerable: Innova
The strong gains in US stocks over the past year, particularly in the technology sector, have been driven more by expanding valuations than underlying earnings growth, leaving them exposed to a ...Read more

Stock market
Sun Silver to make its ASX debut with a $13 million IPO
Sun Silver Limited (proposed ASX Code: "SS1") has announced the opening of its Initial Public Offering (IPO) today, aiming to raise a minimum of $10 million and a maximum of $13 million (before costs)Read more

Stock market
Nasdaq hits record high, underscores the value of tech in investment portfolios
The Nasdaq Composite's surge to an all-time high last Friday highlights the importance of incorporating technology into investment strategies. Read more

Stock market
Apple sets an unprecedented profit pace within the GAFAM group in 2023
After navigating through the economic difficulties presented in 2022, the technology sector has demonstrated resilience and growth, with many companies seeing increases in revenue and stock value. Read more

Stock market
Fintech startup okoora unlocks over $3 billion in forex savings for businesses
Fintech innovator okoora has announced it has saved customers a monumental amount over $3 billion through international foreign exchange transactions. Read more

Stock market
Google's Gemini edges out ChatGPT4 in groundbreaking AI showdown
Google's latest AI model, Gemini, has edged out OpenAI's ChatGPT4 in a recent set of rigorous multi-discipline tests, marking a significant milestone in the large language model (LLM) sector. Read more

Stock market
International stocks: Diversifying your portfolio beyond Australia
In an increasingly globalized market, Australian investors have the opportunity to enhance their investment portfolio by incorporating international stocks. Diversifying your investments globally can ...Read more

Stock market
Stock market rally likely to continue regardless of Fed minutes tone, says deVere CEO
The bull run that has propelled Wall Street's major indexes to record highs this month is expected to continue regardless of the tone of the upcoming Federal Reserve minutes, according to Nigel Green, ...Read more

Stock market
US stock rally driven more by valuation growth than earnings, leaving tech names vulnerable: Innova
The strong gains in US stocks over the past year, particularly in the technology sector, have been driven more by expanding valuations than underlying earnings growth, leaving them exposed to a ...Read more

Stock market
Sun Silver to make its ASX debut with a $13 million IPO
Sun Silver Limited (proposed ASX Code: "SS1") has announced the opening of its Initial Public Offering (IPO) today, aiming to raise a minimum of $10 million and a maximum of $13 million (before costs)Read more

Stock market
Nasdaq hits record high, underscores the value of tech in investment portfolios
The Nasdaq Composite's surge to an all-time high last Friday highlights the importance of incorporating technology into investment strategies. Read more

Stock market
Apple sets an unprecedented profit pace within the GAFAM group in 2023
After navigating through the economic difficulties presented in 2022, the technology sector has demonstrated resilience and growth, with many companies seeing increases in revenue and stock value. Read more

Stock market
Fintech startup okoora unlocks over $3 billion in forex savings for businesses
Fintech innovator okoora has announced it has saved customers a monumental amount over $3 billion through international foreign exchange transactions. Read more

Stock market
Google's Gemini edges out ChatGPT4 in groundbreaking AI showdown
Google's latest AI model, Gemini, has edged out OpenAI's ChatGPT4 in a recent set of rigorous multi-discipline tests, marking a significant milestone in the large language model (LLM) sector. Read more