Allocation to the Digital Tech Space
By now, most C-suite executives have led their companies to digitize at least some part of their business to protect employees and serve customers facing mobility restrictions because of the COVID-19 crisis. We are witnessing what will surely be remembered as a historic deployment of remote work and digital access to services across every domain. In a broad sense, digital technology as a category includes stocks involved with the research, creation, and distribution of technology-based goods or services. That can be everything from computers to software, televisions to websites. Technology is an exciting space that includes trends from artificial intelligence (AI), to smartphones, blockchain, self-driving technologies, the ongoing trend to software-as-a-service (SaaS), the Internet of Things (IoT), streaming media services, and more. It’s an area full of opportunity.
Digital technology has expanded far beyond what would have once been considered the typical tech stocks, including computer companies like Apple, Microsoft, IBM, and others. It now covers companies like Netflix, Amazon, Roku, Zoom Video Communications, Teladoc, Digital Realty, Slack, Shopify and other such companies involved in cloud computing and security, Artificial intelligence, streaming media etc. The notion that consumers and enterprises will conduct a growing amount of their lives and businesses online is nothing new. At a macro level, this is a change that’s been happening gradually over nearly 40 years. However, the scale and scope of the COVID-19 is changing that. With more people necessarily relying on technology to work, shop, and socialize than ever before, the move to adopt next-generation technologies, services and strategies is accelerating at an unprecedented rate.
Recent global events have completely shifted the user focus to the digital tech space, with excessive investments pouring into the space, making a compelling case for investment allocation to the digital tech space. In response to COVID-19, consumers, employees and citizens across all demographics and sectors worldwide are embracing an array of digital activities and technologies throughout their personal and professional lives. Those companies able to use technology well to keep going and rethink their business model for the future by fast-tracking digital transformation will be ones ahead of their competition. Identification of these businesses and investing in them is the key for long term portfolio management, as these companies are going to be the winners in this swiftly evolving global economy.