Goldman has a complete breakdown of how to trade the future of work

Published Mon, May 25 20209:09 AM EDT

(This story is for CNBC PRO subscribers only.) Covid-19 forced hundreds of millions of people to work from home virtually overnight, but the changes it's fueling — including virtual desktops and employee communications shifting online — will continue long after the pandemic abates, Goldman Sachs said on Friday. "Trends long in motion in technology are being accelerated ... and are likely to retain their momentum after lockdowns ease, while other trends will emerge and shape the next generation," the firm said in a note to clients. Goldman expects profound changes in the types of hardware and software that will be needed to fuel the workplace of the future, including sophisticated software for identity management and network monitoring. With that in mind, the firm combed through stocks that are best positioned to capitalize on these growing trends. Software On the software side of things, cloud computing has already revolutionized businesses, and Goldman foresees the slope of its adoption steepening thanks to the pandemic. "We expect to see a further inflection in cloud adoption as companies are now forced to confront the difficulties of managing on-premise infrastructure," the firm said. According to research company Gartner, cloud penetration in the first quarter of 2020 was just 13% of a $673 billion market. Amazon , Microsoft , Google and Alibaba all have cloud offerings, and Goldman believes they will "remain the dominant cloud providers." Some companies including Twitter and Shopify have already announced plans to make working from home a permanent option, and if more companies follow suit, software that allows users to view their desktops from any location will see greater utilization. Citrix Systems develops this type of software, and Goldman said it's "well positioned" to capitalize on the surge in remote working. The stock, which has jumped 23% this year, is on Goldman's conviction list. While employees once might have bounced ideas off of one another in a meeting, collaboration will also move online, driving the need for best-in-class communication tools. On this front, Goldman envisions Salesforce , Alphabet , Microsoft and Slack leading the way. The firm has a buy rating on all of these stocks apart from Slack. Goldman said that while Slack is the "mind share leader in the collaboration software market," this is already reflected in the price of the stock. Additionally, the firm said that Microsoft Teams could take market share over the long-term. Shares of Slack have rallied 40% this year. Goldman said that Atlassian will benefit from project management shifting online, while RingCentral can capitalize on a surge in video conferencing. Zoom Video is generally recognized as the current leader in video conferencing, and shares have more than doubled this year as the number of users surged. But the valuation has now become stretched, Goldman said, and the firm has a sell rating on the stock. With more and more employees accessing their company's software from around the world, web performance and security will become instrumental in making sure products function as planned without making servers vulnerable to interference or data breaches. "We expect an evolving threat landscape, continued digital transformation initiatives and changes in enterprise computing architectures to drive sustained growth in the enterprise information security software and risk management market," Goldman said. The firm believes the market will grow from $136 billion in 2019 to over $170 billion by 2023. In this area, the firm favors Palto Alto Networks , Fortinet , FireEye and Okta , and has a buy rating on all four stocks. Hardware Goldman said that as remote work continues, people will invest more in their home workstations, and there will be swifter adoption of new technologies like LIDAR screening, which can enhance video conferencing, among other things. "We believe businesses may seriously consider extending enterprise network infrastructure to employee's homes," the firm added, noting that employees contending with local wifi issues could become an ongoing problem. "We see the potential need for enterprises to increasingly provide employees with home infrastructure as a means to securely and reliably connect to corporate networks." Goldman believes that the infrastructure extending to home market will grow to $9 billion by 2025, and that names like Adtran , CommScope and Juniper Networks could benefit from the growth. Notably, the firm has a sell rating on shares of Apple . While Goldman said that the company has the "engineering skill-set to produce competitive AR/VR products," it has concerns around the high valuation and expected slowdown in iPhone sales. - CNBC's Michael Bloom contributed reporting.

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(This story is for CNBC PRO subscribers only.)

Covid-19 forced hundreds of millions of people to work from home virtually overnight, but the changes it's fueling — including virtual desktops and employee communications shifting online — will continue long after the pandemic abates, Goldman Sachs said on Friday.

"Trends long in motion in technology are being accelerated ... and are likely to retain their momentum after lockdowns ease, while other trends will emerge and shape the next generation," the firm said in a note to clients.

Goldman expects profound changes in the types of hardware and software that will be needed to fuel the workplace of the future, including sophisticated software for identity management and network monitoring.

With that in mind, the firm combed through stocks that are best positioned to capitalize on these growing trends.