Technology innovations introduce a new era in the way humans live, work, and even relate to each other. The worldwide technology sector cannot be overlooked because of its tremendous effect on our lives and the way we do things. Technology breakthroughs are highly notable in areas such as robotics, autonomous vehicles, nanotechnology, 3D printing, materials science, biotechnology, quantum computing, energy storage, the Internet of Things, artificial intelligence, and many more. There is a lot of research and information that shows steady growth in the technology sector over the years and tech companies have a sustainable growth of earnings. Here are a few trends that elucidate why investors will benefit immensely from holding technology stocks in their portfolios.
Consistency of Earnings
The rising demand for technology results in an increase in company earnings. Most companies in the technology sector are experiencing increased sales and very few companies miss their quarterly projections. Many fields in the sector are reporting strong fundamentals, especially the internet stocks and semiconductor sectors. However, this does not mean that every stock in the technology sector is ordained for success. This is because some older technology firms experience declining sales, while some start-ups are trading on very high valuations and spend lots of money on unsustainable business models. This means that you need to be selective when investing in technology stock.
The Growth of machine learning and alternative intelligence
The upward trend of artificial intelligence and machine learning are of great importance. All these innovations require cheap memory and use huge quantities of memory. The continuous growth of these sectors is something to be keen about, especially for individuals looking for promising investment opportunities. Then again, when you consider advanced driver assistance systems for vehicles, some of these cars use 24 gigabytes of dynamic random access memory (DRAM).
The increased acquisitions and mergers in the semiconductor manufacturing field have made companies more profitable just like the impact that consolidation had on the airline industry. Furthermore, cutting-edge chips are getting more expensive in the long run because of the Moore’s Law. This novel industry dynamic is quite positive for the semiconductor industry. It is without a doubt that the semiconductor stocks offer more boom for cash compared to software and internet stocks.
Smartphones are becoming more expensive
With time, there is a high probability of smartphones becoming boring to consumers. Although the growth of the sales of these mobile devices is slowing down, the average phones are becoming more costly. This is because the dollar content of the chips in these devices is on an upward trend. There is better Wi-Fi capability, 3D sensing, biometrics and even more memory for every phone. These are positive trends on the best tech stocks to buy that investors should keep in mind. This is because the content is on an upward trend although the unit volumes are not experiencing much growth.
Imminent Cloud computing Growth
With the exponential growth of e-commerce and content streaming, large cloud information centers must be created to accommodate them. In addition, these cloud data centers must increasingly add capacity and maintain excellent security. These data centers require a lot of storage, which means a significant amount of solid-state drives (SSDs). SSDs are now replacing disc drives, but these SSDs also require frequent replacement because they have several write-and-erase cycles before they also become less reliable. This means that over time, newer innovations in this sector are inevitable.
It is without a doubt that there is an overall positive picture about technology stocks. The fundamentals of tech stocks appear to be in great shape and the future seems brighter. The themes that will transform our lives in the future, for example, autonomous driving, cloud computing, and artificial intelligence are likely to drive significant investment returns for most of these technology companies.