Concerns over the Federal Reserve’s prospective interest rate hikes this year, multi-decade high inflation, and ongoing supply chain issues culminated with a market sell-off last month. The interest rate-sensitive Nasdaq Composite even entered correction territory. However, a strong economic outlook for this year and a continuing surge in demand for tech products and solutions should drive the tech industry’s growth.
Increased funding for the technology sector should enable prominent large-cap tech companies to grow substantially. Furthermore, an easing of the semiconductor chip shortage should drive the industry's long-term growth prospects. Investors’ interest in large-cap tech stocks is evidenced by the Technology Select Sector SPDR ETF’s (XLK) 3.3% returns over the past six months versus the SPDR S&P 500 Trust ETF’s (SPY) 1.2% gains. U.S. tech spending is expected to exceed $1.8 trillion in 2022.
