Just two weeks ago, a deal was struck that has the potential to totally reshape a key tech sector. The most important tech company that nobody has ever heard of is joining forces with one of the fastest growing firms in the sector.
To get an idea of just how important this unknown player is, you probably use their tech every day before you even have breakfast in the device you use to set your alarm, and the internet router you use to check the morning news.
The brand defining devices made by Apple Inc. (AAPL) all rely on this company’s tech. That’s why this deal is going to change the entire tech sector.
How the tech works is complicated, but how they can make you money isn’t.
Where tech goes, the entire U.S. market and economy follows. That means that, even if tech is driving the market higher and higher on average, the entire market is going to pull back when tech sees a downward move that’s so close to a correction that it might as well be one. But this is just a break from outstanding growth. And not only that, prices in tech are looking healthy compared to the broader market. It’s an important moment to avoid panicking and look for great opportunities to buy outstanding tech stocks at a discount. I’m expecting good things in the future for classic giants like Apple Inc. (AAPL) along with smaller firms like AudioCodes Ltd. (AUDC). Click to watch!
This month, I’m back with the second installment of the Strategic Tech Investor Monthly Mailbag, where I’ll be taking a look at some of the most pressing questions I’ve received about the direction of the economy.
I talk about the post-COVID future of Shopify Inc. (SHOP), the new rise of retail investors, the massive competition for an effective vaccine, and the future of the entire tech sector.
You can click on the video image below to hear all about what I have to say. And, for next month, if you have any questions about tech investments and the tech-driven market, leave a comment on this video for a chance of having it featured on next month’s mailbag.
When you run a marathon, it’s better to focus on the finish line rather than each breath or stride. That was the first thing that came to mind this month as the tech-heavy Nasdaq sold off roughly 10% and Apple saw $180 billion erased from its market valuation in a single day, the most any U.S. company has ever lost in a trading day.
Focusing on the finish line is important not just in sports but also in the stock market. While the tech sell-off hammered markets over the last two weeks, it is important to look at the bigger picture. Just like a marathon runner might need to slow down to catch their breath, the market needs to do the same thing. A healthy pullback is good for any bull market.
Since the market collapsed in late February and early March the Nasdaq is still up roughly 60% and close to record highs. To me, the pullback is a blessing in disguise as the best tech stocks will continue to rise long into the future.
Remember, this is a marathon, not a sprint. Just look at Tesla Inc. (TSLA). Its stock dropped by almost 50% in 2018-2019, and in 2020, it had a similar drop. But if you would have held on for the ride instead of selling in the downturn, you would be up over 500% today.
The same could also be said for semiconductor company Nvidia Corp. (NVDA). It saw an over 50% drop at the end of 2019 and then in 2020 dropped 30%. But if you held on through the drops and even bought right at the previous peak, you would still be up over 70%. Going out even further, you could be up 10,000% and 30,000% respectively. Those are some big gains anyone would be crazy not to want.
That is why it is important to look at the bigger picture. The Nasdaq has its ups and downs and just like a marathon, it takes some time to get to the finish line. This month’s highs are still above the peak before the pandemic and this comes at a point when the economy is still far from recovered.
So, when I see pullbacks like this, I go back to tried and true companies that survive these market conditions and have the fundamentals to move higher.
To understand today’s investment potential, I have a visual aid that you can access right now.
In fact, it’s on your hand.
Take a moment and look at one of your thumbnails. Even if you have a large one, it’s probably less than one square inch.
Now, imagine putting 1,000 tiny electronic objects on it.
Seems like it would be pretty difficult to get all of those on there, right?
Now, imagine millions of tiny electronic objects are sitting on your fingernail.
Looking at your hand, that probably seems downright impossible.
And yet, it is possible – along with so much more – thanks to the advancements in semiconductors.
IBM, in partnership with Globalfoundries and Samsung Electronics Co. Ltd., announced in April that it is developing a 5-nanometer chip that could squeeze 30 billion transistors into a semiconductor the size of your fingernail.
These advancements will play a role in everything from connecting people to the Internet of Things (IoT) to increasing smartphone battery life up to three times to improving the longevity of your other tech devices.
This is big business, with the semiconductor market worth $430 billion.
Of course, as you can imagine, getting all of those tiny transistors to work is tricky stuff.
Today, I’m going to show you a leader in electronic design automation (EDA), which is essential to the design of semiconductor chips and making sure they work properly.
This aggressive firm can handle the core development work for chips, printed circuit boards, and all related hardware systems.