Bullish on economic recovery, Goldman Sachs strategist predicts big tech will continue to perform

Key Points
  • Strategists recognize a global trend of economic recovery but disagree on what role Trump's policies are playing.
  • Investors are rewarding big technology companies for making large investments in their own businesses, said Goldman Sachs strategist David Kostin.
  • Despite market highs, analysts recommend investing now.

As markets trend higher, companies making significant investment in their own business continue to outperform those that don't. That's good news for big tech.

And strategists analyzing what increasingly looks like a global trend of economic recovery disagree on what role President Donald Trump's economic policies are playing.

Markets are already heading for targets that David Kostin, Goldman Sachs' chief U.S. equity strategist, set for the end of 2018 into 2019. He hasn't amended those targets, but Kostin is still optimistic.

"There is the economic data suggesting there is a synchronized global recovery," Kostin said on CNBC's "Squawk on the Street" on Tuesday. "The economic expansion is likely to persist, and so the companies that have positioned themselves for that have been doing much better."

He noted that those companies making large investments in capital spending and research and development have been favored by investors over companies that used strategies involving buybacks and dividends.

Most of the companies making these kinds of investments are in big tech, in part because they have enormous scale to support those investments.

"It's been an excellent quarter, particularly dominated by tech," Kostin said. "That's probably been a theme all year."

With the S&P 500 up 21 percent so far this year, Kostin recommended investing in tech and doing so now.

Kostin attributed some of the market growth, up 20 percent in the past 12 months, to confidence in Trump's economic policies. He argued that the tax reform proposed by Trump's administration would benefit those companies that make most of their revenue domestically, like tech companies.

Jonathan Golub, chief U.S. equity strategist at Credit Suisse, disagreed. With William Dudley and Janet Yellen poised to step down from the Federal Reserve, Golub argued the subsequent shakeup would introduce volatility and problems in the future.

"I don't think the market's being driven by Donald Trump and his economic policies, I think it's being driven by really good economics," Golub told CNBC.

Despite his reservations about Trump's policies and the Fed, Golub recommended investing now. The market may be reaching highs, but he said he doesn't anticipate it pulling back anytime soon.

"The trend is your friend, underlying fundamentals are good. As the pullback is likely to be small, I wouldn't be waiting for an entry point right now," he said.