Government Tech Boom Upgrade Cycle Coming
A major tech upgrade cycle is coming, this time from the government. Jared Kushner led a White House Office Of American Innovation meeting with top brass from the tech sector yesterday.
Tech Spending Bill
They are moving through Congress to pass the Modernizing Government Technology Act which will shift $80B in annual spending to more modern systems including cloud services. The government will not only shift monies but will also add additional funds.
CNBC reported Mr. Kusher saying that government “systems are decades old” with two-thirds still legacy systems. CNBC also reported that President Trump’s director of strategic initiatives Chris Liddell said there is a “$1 Trillion opportunity over the next ten years.”
If this bill passes we are headed for a major government-led upgrade cycle. The government is already estimated to be about 20-40% of the total GDP spend.
Biggest Winners And Losers
The biggest beneficiaries are of course likely to be Amazon, Google and Microsoft. The biggest loser will likely be IBM who leads in government legacy systems.
Tech Led Productivity Boom Coming
We recently reported that we think there is going to be a huge technology stock boom coming already anyway. Even though the Fed is scratching their heads wondering why productivity is so low, we think it's about to bolt higher.
If you consider the amount of automation and artificial intelligence being designed in to new products this stat below is about to take off.
More spending combined with a productivity jump can help further ignite this stock market rally led by tech growth rates reaccelerating.
|St Louis Fed|
There are still tons of bears in the stock market but the economy and earnings have been picking up. A technology stock tech boom can add more fuel to this bull market.
Also thanks for the great reports from Anita Balakrishnan of CNBC
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