No matter what happens on the stock market, it seems that technology always plays a huge role in investing. Tech stocks are often some of the most popular stocks available and many fortunes have been earned and/or lost through investments in technology. In fact, recently, it appears that stocks from the tech industry are getting even more attention. Take the month of January, for example. Research shows that in the first month of this year, exchange-traded fund (ETF) investors were very gung-ho on technology stocks. An ETF is an investment fund that is traded on the stock exchanges, in a similar manner as stocks.
Flip-Flop in Tech Stocks
When it comes to money flow in January, the strongest S&P 500 sector was technology, as investors doled out more than $897 million towards the Technology Select Sector SDPR. So how big of a difference was this from last year? According to research, last year investors actually sold around $900 million of these types of stocks. So without question, if January is any indication investors are very keen on ETFs in the tech industry. So naturally, one would ask, what has changed from one year to the next?
Big Companies Report Positive Earnings
Perhaps the most significant change is that some of the biggest names in the tech industry are performing so well, including Apple, which recently reported better than expected results on its latest quarterly earnings. Additionally, other big names, including Microsoft, Intel, Texas Instruments, Lam Research, Advanced Micro Devices and KLA-Tencor also have reported strong earnings recently.
More Good News on the Way?
There is other good news as well, and it has to do with politics and taxes. Many of the nation’s top tech companies store much of their earnings overseas, in order to cut back on their tax bill, given the country’s high corporate tax rate of 35 percent. However, with the Trump administration now in place there is a good chance that corporate taxes will be going down, which means many of these companies, including Apple could be willing to bring that money to U.S. soil, which would be a huge boost for the U.S. economy and to tech stocks, as well.
Uncertainty Still Exists
However, no investment sector is immune to challenges and the tech industry is no different. In fact, some of the things that seem like positives, at the same time could be seen as negative. Take for example, the Trump administration. While the president could create a more lax corporate tax policy, the entire tech industry is also concerned with how some of his other policies could affect them, such as his stance on immigration. With much uncertainty and so many unanswered questions, the tech industry is not full proof from a downturn. However, if the first month of 2017 is any indication, then this could be a big year for tech stocks and those who invest them.