Technology Stock Predictions for 2008
Technology stocks have had a nice run in 2007, largely thanks to healthy demand for PCs with new software products, and exciting new gadgets like Apple’s (AAPL) iPhone. The sector moved up in the first half of 2007, then retreated during the summer and autumn, along with many other sectors, amid worries about the U.S. economy caused by the subprime mortgage meltdown. So far this year, through Dec. 13, the Standard & Poor’s Information Technology index gained 15.9%, handily beating the 4.9% rise in the S&P 500-stock index.
Standard & Poor’s Equity Research has an overweight opinion on the information technology sector and an associated positive fundamental outlook. We believe technology companies and stocks should benefit from healthy domestic spending from enterprises and on consumer electronics, strong international demand, and new product and upgrade cycles.
We also see valuations as attractive, especially on a price-earnings-to-growth basis. Moreover, we believe many technology companies are rightly focused on delivering shareholder value, and are employing buybacks, strategic mergers and acquisitions, and restructuring/realignment efforts to provide it.
Here’s the first of a two-part rundown of our IT analysts’ outlooks for tech subindustries and stocks, covering semiconductors, chip equipment, computer hardware, storage, electronic manufacturing services, and systems software. Part 2, featuring outlooks on application software, Internet software and services, home entertainment software, IT consulting and data processing services, and telecommunications services and communications equipment, will follow on Dec. 24.
