With growing doubts about the pace of economic growth and a post-pandemic boom, investors are increasingly turning to large cap tech stocks to hedge against inflation and possible economic downturns.
By Georgina Tzanetos
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Bloomberg reports that resurgent doubt regarding the strength of the economic recovery post-COVID has traders shifting back into the tech behemoths “whose dominance of high-growth industries leaves them poised to keep sales and profits rising even if the economy slows down.”
Many companies cannot afford to pass the higher costs they experience through inflation onto the consumer — except for tech. In an inflationary period, Apple for example, will experience higher costs for goods as the rest of the economy does. While other companies might lose customers when they raise prices, the “brand sells and those costs can be assumed by its customers,” Mad Money host Jim Cramer said.
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Cramer also added that a stock like PepsiCo is an exception to the rule in consumer packaged goods stocks. The company will be burdened with higher costs, but it can pass it on to consumers in the form of higher prices for drinks, chips and other products.
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Last updated: July 14, 2021
