Few Buy Ideas in the Tech Sector Today
Pandemic could speed up the transition to cloud computing and remote working.
Like the broader stock market, technology stocks sold off at the end of the first quarter over concerns about the coronavirus but rebounded sharply thanks to renewed optimism around the economic damage from the pandemic. That said, the long-term tech story is compelling, as the pandemic might be accelerating the trend toward cloud computing, remote working, and other technology productivity solutions. As of June 23, the Morningstar US Technology Index was up 35% on a trailing 12-month basis, vastly outperforming the U.S. equity market, which is up 7.7% in the same period. Over the past three months, tech readily outperformed the broader market during the COVID-19 rebound, up 31.4% compared with the broader U.S. equity market, which was up 23.1% as of June 23. Before coronavirus concerns, tech stocks fared well in late 2019, with optimism about a resolution to the U.S.-China trade wars that weighed on the sector in late 2018 and at times in 2019.
Tech outperformed broader market in both the recent sell-off and rebound. - source: Morningstar
Brian Colello does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.