Continued advancements in technology make the technology industry one of the most closely tracked sectors for investment. While this could be the right time to invest in the space, the high-interest rate environment could have varied impacts on different tech businesses, making it risky to invest in specific stocks.
Moreover, given their enormous growth potential, most tech names trade at an expensive valuation. Therefore, a relatively safer approach to capitalize on the industry’s promising growth prospects could be to have exposure to buckets of tech stocks by investing in promising tech ETFs.
To that end, Innovator Growth Accelerated Plus ETF – July (QTJL – Get Rating), First Trust NASDAQ Technology Dividend Index Fund (TDIV – Get Rating), and iShares Semiconductor ETF (SOXX – Get Rating) could be wise portfolio additions now.
Despite the high-interest rate environment, tech stocks have had a stellar run this year, with the tech-heavy Nasdaq Composite returning 36.2% year-to-date. The hype around generative AI has primarily fueled Nasdaq’s surge. Generative AI is being billed as the next big thing after the Internet.
Spending on tech has become almost non-discretionary for enterprises. Technology provides organizations with the required edge to get ahead of the competition. Gartner expects worldwide IT spending to grow 3.5% year-over-year to $4.69 trillion in 2023. It is further expected to grow 8% year-over-year to $5.07 trillion in 2024.
The rise in IT spending could be attributed to the rapid adoption of digital transformation initiatives across various industries. The global digital transformation market is expected to grow at a CAGR of 26.7% to reach $4.62 trillion by 2030.
As part of the digital transformation initiative, enterprises swiftly transition from traditional software applications to cloud-based software services. Cloud technology aims to provide rapid, scalable access to computing resources and IT services.
According to Gartner, software and IT services segments will see double-digit growth in 2024, driven by cloud spending. Global spending on public cloud services is forecast to increase 20.4% in 2024.
Investing in tech ETFs could expose investors to emerging technologies in the market, such as cloud computing, generative AI, AR & VR, blockchain, cybersecurity, edge computing, etc.
Considering these conducive industry trends, let’s evaluate the three…
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