Did Covid-19 push technology companies into another phase?

We have seen the coronavirus pandemic, force many aspects of life to be replaced by online equivalents. We could see lasting change regarding structural trends, with many companies adopting a work from home option for its workforce. Virtual schooling (e-learning), an area that will evolve at greater speed, as many leading universities and academies offer on-line courses globally, for the increasing demand. Several technology companies will benefit from e-learning. Companies like Chegg, an on-line tutoring platform, which has 3.9million subscribers and growing.

Telemedicine, another area that is likely to be the norm. with Initial appointments being with doctors remotely (on-line via Video) where possible, and with the increased home working there has been an unprecedented demand for video conferencing. Companies like Zoom being virtually unknown by most people until lockdown, Google who also has video conferencing facility has also seen massive demand. On-line grocery and e-sports, just two other sectors seeing rapid digital transformation and benefitting their industries.

All this rapid change has allowed consumers and workers to make changes to their lifestyle, by improving wellness, leisure habits, moving out of Urban areas and embrace the shift towards a cashless Society  Governments are likely to invest heavenly into telecoms, this will of course encourage regional economic rejuvenation. Countries future prosperity will depend on that.

The resultant being Covid-19 pandemic forcing these many aspects of life to being replaced by on-line equivalents, has rapidly accelerated numerous themes set to power growth in the technology sector for the foreseeable future. Since the market crash in early March, which has provoked one of the deepest recessions in history, we have seen a remarkable share price recovery in technology shares. Especially those companies with competitive advantage, which will grow with their user base. The leading companies being Facebook, Amazon, apple, Netflix and Alphabet (google), Know as the FAANG’s have four months on show such recovery that four of this group are now at all-time highs.

For many investors these are either “Must own” stocks or reminiscent of the Dot Com Bubble, The question is Can anything stop the FAANG’s?

There are are of course many technology companies, that have benefitted from growth in their user base, which could be one of the leading companies in its specific area, be it software, cybersecurity or many of the other sectors which are being disrupted

If Capital Growth is an objective, the investing in a basket of technology shares could be an option. One way of doing so is to use a specialist fund such as an Investment Trust or ETF (exchange traded fund). That way it is likely that one of the next big technology companies could be part of the investment strategy Technology is just one of many sectors and should form part of a well-diversified and balanced portfolio. Should you wish to discuss anything please do not hesitate to make contact.

Stephen Lovelock