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Our Outlook for Technology Stocks

The end of inventory destocking.

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The technology supply chain is showing some very faint signs of life, and the technology heavy NASDAQ has rallied markedly since the early March lows. However, a slightly less negative information flow speaks more to the fact that few pits are actually bottomless rather than to any fundamental uptick in end demand. The good news is that much of the technology supply chain, from chips to hard drives, has done an admirable job of taking out production capacity in the last few months. As a result, inventory destocking, or the process of working off excess inventory, has run its course for now.

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Toan Tran does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.