As inflation remains at record levels, some stocks stand out for their ability to hedge investors against the impact of higher interest rates better than others. That’s the message from Trivariate Research, which argues that as inflation stubbornly remains above the Federal Reserve’s 2% annual target, investors are increasingly concerned about the obstacles companies will face from rising borrowing costs and the need to raise prices. “The landscape changed after historically low interest rates in the U.S. fell post-COVID,” Trivariate Research founder and former Morgan Stanley chief U.S. equity strategist Adam Parker wrote in a recent note. “As a result, a large negative correlation between interest rate perceptions and growth company valuations has emerged since the second half of 2021.” But interest rates and inflation risk have become less and less impactful on stocks over time, despite continued high stock price gains. A basket of high-quality growth stocks was once negatively correlated with inflation, with stock prices falling as inflation rose, but that relationship has since changed, according to Trivariate. “Currently, our basket of high-quality growth stocks has zero correlation with inflation stocks,” the firm said. In the same report, Trivariate Research introduced a basket of high-quality technology stocks with near-zero correlation to the basket of inflation stocks. Below are some of the stocks included in the list. One of the companies named is Keysight Technologies. The electronics manufacturer’s shares have fallen nearly 10% this year. Still, Morgan Stanley, which is overweight the stock, named Keysight a “top pick” earlier this month. “We see a bottoming of FY24 guidance after a roughly 12% decline in earnings last quarter, and valuation (roughly 20x FY25) is reasonable for the exposure,” Morgan Stanley analyst Meta Marshall wrote. “Stable order intake and outlook for a recovery timeline could act as a catalyst.” Trivariate’s basket also includes Procore Technologies, which develops management software for the construction industry. The company’s shares have been roughly flat since the start of the year. In April, JPMorgan named Procore one of its top picks, citing its position as a leading provider of a construction-focused software-as-a-service (SaaS), cloud-based platform. “Procore has exposure to approximately $11 trillion in construction transactions annually worldwide. Multiplying this figure by its investment shares…[d] The bank notes that if you calculate the share of IT budgets invested in IT solutions (1.7%) and directed to application software (7.3%), you arrive at a “total addressable market” of about $13 billion worldwide. Cloud computing stock Nutanix has soared 52% this year, but Raymond James believes there’s room for more. The firm recently upgraded Nutanix’s rating to outperform from market average. “Following the Broadcom acquisition, we now better understand the opportunity for Nutanix to grab share from VMware,” analyst Simon Leopold wrote. “Broadcom’s efforts to improve VMware’s growth and performance have led to higher-than-expected increases in bundles and prices, which may lead some customers to seek alternatives to Nutanix in certain circumstances.” — CNBC’s Michael Bloom contributed to this report.
Trivariate Research says you should buy quality tech stocks that aren’t affected by high inflation or interest rates.
Services
© 2026 Business Investopedia. All Rights Reserved.