Off the Chart: Technology is calm, but still strong as the world digitizes | Business

Tech stocks are in dormancy this year, which may seem weak as the economy recovers, but it’s really just dormant.

According to analysts, digital devices, software, and even cybersecurity will become key areas of steady growth as consumers and businesses continue to digitize their operations. The digital shift became even more apparent when the viral pandemic forced people to work, shop, and entertain at home.

“Many trends accelerated during the pandemic will continue to remain strong as the economy resumes,” said Christina Hooper, chief global market strategist at Invesco.

Tech stocks were quiet, up about 6% most of the year, as investors take advantage of growth elsewhere as the economy recovers. This is in contrast to 2020, when the sector surged 42%. While the rapid growth of 2020 is unlikely to repeat, tech companies and their stocks are poised to grow long-term beyond the pandemic.

The pandemic has tied more people to mobile devices and other technologies for work, shopping and leisure. Although the normal pre-pandemic state has returned to some extent, many of the habits formed in 2020 remain. Remote work is likely to become more common in many areas, and enterprises will have to spend more to enhance cloud computing capabilities and cybersecurity.

Many companies needed to shift from face-to-face meetings to virtual meetings, and companies like Zoom Video Communications Inc. suddenly became famous. The technology is now likely to be part of a lasting job.

“Employees are back in the office, but they aren’t working full-time. They still need to invest heavily in technology,” Hooper said.

Research and advisory firm Gartner reports that companies will be forced to accelerate their digital transformation plans by at least five years as more companies permanently hire telecommuting. Information technology spending in 2021 could increase by nearly 5% to $ 332.9 billion.

Another key trend that brightens the future of technology is that more people are accustomed to shopping on mobile devices, using digital services for financial transactions, and even shifting leisure activities to the digital world. Widespread adoption of living room.

According to NielsenIQ, the pandemic has exploded online shopping for common everyday packaged items. By 2020, consumers spent $ 110 billion on household items and other items through online shopping, an increase of 50% over the previous year. While the pandemic seems to have converged and more people are returning to stores, businesses continue to be a big part of sales, with online trends having the advantage of being easy and time-saving. I expect it. Probably the best-positioned company during the pandemic, it’s well-positioned over the virus. Many other companies needed to quickly enhance their online capabilities. CVS, Target, Macy’s, and a wide range of other retailers are increasing their investment in systems that allow online ordering and delivery or easy receipt from stores.

In a February report, NielsenIQ said, “Organizations are stepping up their digital transformation as open technology isn’t an advantage, and bigger bets.”

In the first quarter, corporate spending helped to flex the profitability of the sector, despite the modest rise in corporate stocks. The S & P 500’s tech companies reported revenue growth of over 40%, with the largest number of companies in the sector surpassing Wall Street’s forecasts.

Analysts say the results have helped justify the highs of many stocks, and the sector remains strong even if stocks aren’t rising at the same rate as seen in 2020. Indicates that it is an investment.

“What’s happening right now is a shift in where people are diversifying,” said Jamie Cox, managing partner of Harris Financial Group. “Technology is doing well as things normalize.”

Off the Chart: Technology is calm, but still strong as the world digitizes | Business

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