If the past year has taught us anything, it’s that big tech has taken over the world. Silicon Valley titans such as Amazon, Apple, Microsoft, and Netflix saw their profits reach record-highs in 2020, with some companies making more in the space of a few months than they had in the previous three years combined.
With this came an investor fever, as big tech’s success led to unprecedented levels of retail investment in the hottest stocks on the NASDAQ and the Dow.
As an industry, US tech stocks have been more popular than at any time since the Dot Com bubble. However, signs are on the horizon that the boom time is coming to an end. Let’s take a look at the future prospects for the world’s hottest tech stocks.
Blue Chips Are Back
Although the upstart tech stocks have received a rude reality check, the blue-chip stocks have a much stronger outlook ahead. This is because many of them are investing heavily in emerging megatrends that became apparent long before the tech boom of 2020. For example, Amazon is set to profit massively from its investment in cloud computing, where it expects to retain a majority of the global market share.
Although the upstart tech stocks have received a rude reality check, the blue-chip stocks have a much stronger outlook ahead. This is because many of them are investing heavily in emerging megatrends that became apparent long before the tech boom of 2020.
For example, Amazon is set to profit massively from its investment in cloud computing, where it expects to retain a majority of the global market share.
Microsoft is emerging as one of the world’s premier chip manufacturers – an increasingly important industry that will shape the future of the IT industry. Apple is becoming one of the largest data centre landlords on the planet. You get the picture.
Of course, growth in share prices for these companies will be more modest in 2021 than in 2020. That’s why retail investors should always seek a broker with the lowest spreads, especially if they are speculating on big tech by investing in CFDs, and there are brokerage platforms that specialise in this.
For example, INFINOX CFD stocks charge only $0.02 on all CFD trades, and could themselves be set to gain significantly from the popularity of blue-chip tech stocks in the years ahead.
Upstarts Get a Reality Check
The economic trends of the past year have taught us that any mid-size tech company could become tomorrow’s billion-dollar behemoth. Upstart stocks such as Zoom and Peloton grabbed headlines around the world as their products became trendier than ever, pushing revenues to new heights and multiplying the share value of each company several times over.
However, it seems that, for these younger companies, the party is over. Both Zoom and Peloton, as well as other 2020 success stories such as DoorDash and GrubHub, have seen their share prices plummet, with no signs of recovery on the horizon. Could it be possible that these tech stocks were overhyped?
Although the market that allowed many of these companies to grow successfully has not changed too much, we are seeing signs that the demand for their singular product offerings might never recover to 2020 levels.
As always in the stock market, there are winners and losers aplenty. Echoing trends in the wider economy and society, it seems like the biggest, wealthiest players are the ones that will continue to stay on top in the years ahead.