As the coronavirus pandemic led to an increase in demand for technology solutions for remote working, schooling and online entertainment; tech stocks reported the fastest growth in 2020. The mass COVID-19 vaccination should speed up the recovery of economies that will benefit the technology industry.
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The shares of these technology firms will rise by 30 percent in 2021.
In addition to industry, manufacturing and ordinary customers, the COVID-19 pandemic has intensified the use of emerging technology in health, education, and other fields.
In 2020, the Nasdaq Composite Index, which contains technology stocks, rose by 43.44% (at the close of trading on Wednesday). More moderate growth of 6.56 percent and 15.52 percent was seen by the Dow Jones and S&P 500, which comprise shares of firms from various regions.
Analysts at Wedbush investment house Daniel Ives and Strecker Back expect that as the world economy recovers from the COVID-19 pandemic, technology stocks will get a fresh lift in 2021. In the United States and Europe, the beginning of mass vaccination provides investors with cause for hope.
Wedbush analysts admit that some tech companies have already reported big gains and strong valuations this year, but many of these stocks have earned downgrades from Wall Street analysts on ratings or target prices in recent weeks because of revaluation issues.
Experts claim, however, that buyers are still keen to invest in the technology industry in growth stocks.
“Our recommendation is still a ‘aggressive’ technology portfolio focused on cloud, cybersecurity and FAANG (Facebook, Amazon, Apple, Netflix, Google) stocks. From our perspective, tech stocks could show another 30 percent growth over the next year, given the transformational growth stories being played out in the market,” the analysts said.
From the start of 2020 and the end of trade on Wednesday, shares of Facebook (FB), Amazon (AMZN), Apple (AAPL), Netflix (NFLX) and Google (Alphabet GOOGL, GOOG) rose 32.46%, 77.82%, 82.15%, 62.13% and 29.62%, respectively.
According to Ives and Bake, the shareholdings of companies such as Uber (UBER) and Lyft (LYFT) will demonstrate the largest increase in 2021, as the launch of vaccinations provides optimism for economic growth, the revival of the tourist sector and the return of workers to offices.
Experts from Wedbush also advise investors to pay heed to Tesla (TSLA) and to companies in the area of speech recognition AI technologies: Cerence (CRNC) and Nuance (NUAN). Since the beginning of the year, shares of Tesla, Cerence and Nuance have risen by 730.42 percent, 352.45 percent and 146.41 percent. Recently, experts pointed out that Nuance has a shot of having significant deals in the healthcare business.
Development estimates for cloud and consumer services firms such as Apple, Amazon, Netflix and Disney (DIS) remain especially high over the next six to twelve months; for cybersecurity companies such as Zcaler (ZS), Crowdstrike (CRWD) and Okta (OKTA); and for companies that have ‘benefited’ from the trend of at-home remote work: Zoom Video (ZM), DocuSign (DOCU) and Slack (WORK).
Approximately 35 percent of business and enterprise workloads in different fields are now in the cloud, analysts say, but they expect this number to grow to 55 percent by 2022.
