Should you consider Tech stocks?
The constantly changing technology climate means that businesses that wish to remain afloat have to embrace the change. That being said, are Tech stocks worth it? What are Tech Stocks? The tech sector puts together all businesses whose contribution to the market is anything electronic, artificial intelligence-based, software, hardware, any form of telecom and information technology in addition to computer science. This sector includes the likes of Micron Technology, Intuit, Booking Holdings, Gilead Sciences, Qualcomm, Charter Communications, Broadcom Inc, PayPal, Netflix, T-Mobile US, Adobe, Comcast, Cisco Systems, Intel, Facebook, Alphabet, Amazon, Apple, and Microsoft to mention but a few.
In a time when the whole world has been forced into lockdown thanks to the Covid19 pandemic, technology has received the opportunity to shine. These tech companies have seen a rise in business within the pandemic given the fact that the virus can’t spread through an electronic network. Companies such as Amazon have experienced their biggest boom so far with people resorting to ordering nearly all their needs rather than go out and risk contact thereby catching the virus.
While other businesses have suffered low production levels due to Labour shortage, some tech companies have embraced technology advancement such as the use of robots to cut down on their need for human labor and to speed up their output way before Covid19 reared its ugly head. Amazon is known to have been one of the leaders in this automation of production thereby challenging the likes of Wal-Mart to join in to catch up with the competition. With that in mind while their counterparts in the S& P 500 experienced a substantial fall, the Nasdaq which puts together the tech companies in the stock exchange has had minimal losses even having gained in the large conglomerates such as Apple, Microsoft, Amazon, and Alphabet.
While many businesses seem to be scratching for ideas to stay afloat, the tech companies are pulling out innovations that have never been seen and are exactly what the world is looking. An example of this is Zoom which has ensured virtual meetings are maintained in the lockdown. This has driven interest in their direction compounded by the fact that to partake in this progression one must acquire the accompanying hardware such as smartphones, laptops, and webcams not forgetting reliable internet connection.
Now I suspect that given your interest in this article you are considering placing your investment in the tech sector however some additional information would help make this decision a safer one for you. The way companies operate on the stock market to maintain financial capital is either through debt or equity. Debt is commonly either by loan or bonds whereas equity is by the sale of shares taking into consideration appreciation and dividends. Most companies work by finding the safe middle ground between debt and equity and as such investing in tech companies with a big debt load and minimal cash flow may result in high-risk factors when the economy is turbulent because lenders must be paid on outstanding debts irrespective of the revenue situation.