Talking Point  

Investors seeking out tech stocks again as digitisation gathers pace

Investors seeking out tech stocks again as digitisation gathers pace
New York Stock Exchange trading floor (credit: Michael Nagle/Bloomberg)

The increase in technology-driven solutions and digitalisation is prompting investors to increase their exposure to tech-stocks.

DeVere Group and founder Nigel Green said, tech stocks which have fallen out of favour with investors as a result of rising interest rates were being picked up again.

Green added: "The tech-heavy Nasdaq has shed almost 27 per cent of its value so far in 2022. 

"And [last month] - as the US Federal Reserve raised interest rates - the biggest technology companies, including Amazon, Meta, Alphabet, and Netflix, lost over $1tn in value in just three trading sessions.”

“However, as the losing streaks are beginning to be reversed and a bounce back begins, in-the-know investors understand that this year’s massive rout is now likely to be an important buying opportunity.

“Savvy investors know that technology-driven solutions and the digitalisation of our lives is set to continue at lightning pace. Therefore, adding discounted, quality tech stocks ahead of the next rally makes good sense.”

Finding value in tech stocks

Investors have been moving away from growth shares, such as some technology companies, as interest rates have risen, which have more of a negative impact on companies whose earnings are further in the future, such as the more speculative technology companies.

Investors have instead been putting money into oil and gas and mining companies, whose profits have been boosted in the current inflationary environment exacerbated by the war in Ukraine.

But Bowmore chief investment officer Jonathan Webster Smith, said despite the fall in some tech shares since the start of the year, investors may now be able to find stocks in the tech sector which can offer value to investors.

“With so many companies seeing sharp falls in their share prices, investors can now pick up good quality companies at value prices.”

“Businesses that can continue to grow their revenues each year should rebound quickly once the negative sentiment moves from markets.”