You’ll have to do a bit of research on what stocks technology funds hold and are they likely to recover soon. For instance has Amazon, Facebook, Apple and Tesla run out of steam or just taking a breather?
Over the past few years, the Coronavirus pandemic not only devastated the global economy, but also changed the rules on what people consider necessary. Due to the fallout from this international event, millions of people found themselves both working and relaxing at home, whilst isolating as instructed. Consequently, our reliance on technology only increased, bolstering their stock price and buffering the impact from widespread economic turmoil. However, in April this year, the party finally ended.
The combination of stocks catching up to this societal return to normality and Putin’s declaration of war on Ukraine hit technology hard. As the weeks raged on, Nasdaq experienced its worst monthly performance since the 2008 economic crisis, as Amazon, Facebook, Apple, Tesla and Alphabet stocks slumped across the board.
This economic quagmire has mostly continued long into the summer, as uncertainty about conflict in Europe mounts. However we are now seeing the tables turn as these industry leaders acclimatise to the current economic climate.
Since announcing their next generation products, Apple’s strong pre-order data reflects the high demand for their updated iPhones, providing some buoyancy for the tech giant. On no less than seven occasions over the past decade when Apple has unveiled a new handset, the stock closed lower than predicted. As a result of the latest launches, the stock rose by 3.9%, the largest increase in a single day since May 27th which is an encouraging sign that this tech stock is still a strong buy.
Amazon is also on the rise. Despite the stock’s popularity, the company has been contenting with a jump in interest rates, rising operational costs and slow revenue growth forcing them to make cutbacks such as reducing their workforce by 100,000 at the end of the 2nd quarter. Since the Nasdaq 100 Index hit its present annual low on June 16th, the marketplace platform has continued to publically curb expenses, resulting in a 30% gain as the compiling efforts have now started to take effect.
Additionally, Alphabet is looking to boost productivity as a means to pull their stock price up. The company has often been criticised for its limited constraints on spending, preferring to invest in the future. However, CEO, Sundar Pichai recently stated that Alphabet will need to become 20% more productive in the coming years. Since the search engine platform is already very productive, (generating £1.8 million in sales per employee) this move could take the form of reducing unnecessary expenses and operating costs whilst also growing current revenue levels.
Technology is heading for a recovery, it may not be immediate as global sentiment is still rather low, but when markets do improve, it will be the technology sector that will lead the way.
Theodore Rouse 20/9/22
Performance Figures – Technology funds of interest
