Technology has been a major driver of global growth for a number of years. As well as having become a huge part of the way we live and work, it has driven growth in sectors such as healthcare. And this trend looks set to continue for the foreseeable future. “[Tech] stocks are growing faster than the broader market, so if you invest in them you’re getting exposure to this growth and companies that are changing the world,” says Ryan Hughes, head of active portfolios at broker AJ Bell.
Companies that have changed the way we live include Facebook (FB:NSQ), Amazon (AMZN:NSQ), Apple (US:AAPL), Netflix (US:NFLX) and Alphabet (US:GOOGL), the company that owns Google. These companies, which are known as the FAANGs, reported good earnings during the last quarter.
Amazon and Alphabet should continue to grow because they are leading research and development in cloud technology. This is the use of remote servers hosted on the internet to store, manage and process data rather than on a local server or personal computer. “Cloud technology has barely penetrated the market so there is tremendous room to grow,” says Ben Rogoff, manager of funds including Polar Capital Technology Trust (PCT). “There are really only about five businesses in the world that can do this because it costs billions and is a question of scale. These companies are Amazon, Google, Microsoft (US:MSFT) and China’s Tencent (Chi:700).”