How has the tech market behaved during COVID-19?
Even though we all may think that technology is doing great at markets and earnings, the true story isn’t that simple.
Yes, the last few weeks have been rough for every single one of us. The increased demand for apps, software and developments from the IT world, we all thought that this market could maintain its numbers and even win this battle market against the coronavirus.
There is a huge reason for that. Billions of people around the globe are now working, studying, learning and staying connected through apps and platforms that the technology and the internet provide us. We may say the whole globe has been experiencing the biggest digital and virtual transition ever. This transformation is inevitably correlated with the output economic output of these companies, the confidence on this market will necessarily grow. This is key because tons of people are surviving the lockdown, thanks to technology.
The truth is some critical services, and even peoples lives are relying on the rhythm of technology developers. As we’ve seen in the past few weeks, machine learning, analytics and telehealth are being used to prevent and fight coronavirus. Technology was up to the challenges. Everyday we saw how apps and software were improved and stepped up their game. This made not only citizens at home rely on it to work during the pandemic, but also governments and the health sector betted hard on it.
With this on the picture, investors and markets paid attention and inevitably turned their attention to the technology market. And that’s the point. Investors were waiting for earnings reports of this sector this week hoping to find good news.
The results weren’t the ones they expected.
The big picture, we have to recognize that the technology sector is by far one the best investments large investors can make during this crisis. In fact, it has been the best performer out of the economic disaster caused by the coronavirus. But that doesn’t mean it will not find any hurt through it.
This week of quarterly earnings results gives us a good idea.
Even giants of the market, such as Microsoft, Apple and Amazon, are being affected negatively. Both Microsoft and Apple are making readjustment on the number of devices their producing. It’s uncertain if it’s caused by supply chain issues, by a reduced number of consumers, or both, but it definitely shows they are not immune to the crisis.
In general, no one really knows how bad the market could get. For example, Apple refused to state its earnings expectation for the next quarter, at the same time, those who offer numbers are being extremely cautious about their predictions for the second half of the year.
This doesn’t necessarily mean these companies will suffer a hard shock from the coronavirus crisis. In fact, it’s probably one of the safest investments when other industries are in such dire conditions.
Still, there’s plenty of uncertainty regarding the state of the market and companies are being overly cautious, which has investors preoccupied. We’ll have to wait and see.