What is really going on with tech stocks?

For example, weakness in technology stocks in February and in early March was, in part, down to confusion surrounding the widely reported semiconductor shortage.

This was until investors remembered that a global semiconductor shortage is an indicator of strength of demand in the tech sector, not weakness, causing the likes of Applied Materials to spike 13 per cent, NXP to rise 11 per cent, and Texas Instruments to increase in value by 10 per cent.

The pandemic has accelerated demand for a wide range of tech-enabled services in almost every industry vertical and the resulting shortage of semiconductors will take the remainder of the year to work through.

Discerning the enablers

The challenge for tech investors post-Covid will be maintaining the deep knowledge required to understand and identify the companies that are powering the disruption: the enablers.

These are the cloud software services as opposed to the fintechs, the chip manufacturers as opposed to the electric car companies, and the online payment platform as opposed to the restaurant delivery business.

The disrupters may be more exciting as stories, but again and again the enablers have turned out to be far better long-term investments.

William de Gale is lead portfolio manager at BlueBox Global Technology Fund