Company Interview / Why Aaron likes these tech and consumer stocks

Key takeaways:

Australian tech is increasingly decoupled from the Nasdaq Local tech market focused on software is seen as at high risk of AI disruption Light & Wonder (ASX: LNW) viewed as a potential value opportunity versus Aristocrat (ASX:ALL) Xero (ASX:XRO) and WiseTech (ASX:WTC) continue to warrant scrutiny due to uncertainty and volatility

Aaron Binsted from Lazard Asset Management highlights a significant decoupling of the Australian tech sector from the Nasdaq, suggesting an end to a long-term trend where local tech mirrored US performance. While the Nasdaq has climbed over 10% in the past several months, local tech stocks have fallen by around 30%. Binsted attributes this disparity to differing sector compositions, noting that the Nasdaq’s strength lies in hardware and semiconductor stocks, while Australian indices are heavily focused on software companies, which he considers the most at risk from artificial intelligence disruption.

Binsted points to increasing concerns over AI’s rapid evolution, referencing examples such as Scout 24 now being integrated into ChatGPT, which raises fresh risks for real estate classifieds. He observes a shift where former disruptors from SaaS platforms could become the disrupted, and cautions investors to closely monitor fast-moving developments and infrastructure changes, such as potential shifts from centralised data centres to local processing.

On the stocks front, Binsted sees potential in Light & Wonder, describing it as similar to Aristocrat (ASX:ALL), but trading at a 20% discount and with the risk of a major lawsuit now resolved. He also names Xero (ASX:XRO) and WiseTech (ASX:WTC) as worth attention despite recent volatility and AI-related uncertainties.