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2017 Stock Market Trends: What To Expect In The Tech Sector

Published 12/20/2016, 08:10 PM
Updated 07/09/2023, 06:31 AM

As 2016 draws to a close, we can see that it was a good year for the stock market as the S&P 500 rose by over 12 percent. But as investors try to figure out what 2017 will look like, the honest answer is that no one really knows for sure. Will investors be expecting a pullback after such a good year, or will technological growth and economic optimism fuel a booming economy? As The Motley Fool observes, investors should “expect anything.”

Expecting anything is good advice for the technology sector as well, but there are certain areas where we can expect massive technological advancements and stocks which will profit as a result. Here are some examples of areas where we could see huge societal technological and how they can affect the stock ticker.

The Cloud and Amazon (NASDAQ:AMZN)

While fields like artificial intelligence and superconductors are interesting, the biggest technological shift for corporate America will be the growing importance of the cloud. Cloud technology is cheaper and faster than traditional data servers and allows small business to hold more data than ever before.

The cloud’s growing popularity is a major boon for Amazon, which finally became profitable off the backs of its Amazon Web Services (AWS) cloud infrastructure platform. AWS’s revenue rate has grown by 55 percent and reached $13 billion, all while traditional data centers have seen their numbers decline. This revenue growth has enabled Amazon to branch out into other projects like same-day deliveries and drones. This does not even begin to touch into the fact that online retail stores like Amazon will continue to grow in importance as customers get more used to purchasing things online and the online customer experience improves.

If there is any one tech company which investors should pay attention to, it is Amazon. Amazon’s commanding share in both cloud technology and online retail will make it a great stock for 2017. Also pay attention to other companies focusing on the cloud like IBM (NYSE:IBM).

The Internet of Things finally arrives

Tech gurus have talked about the Internet of Things for quite some time, envisioning an age where all of our devices are hooked together and can communicate to improve our quality of life. However, the big problem with this idea over the past few years is that there has not been a way for all of these devices to actually communicate across brands, which has made adaptation slower.

But the development of the Apple (NASDAQ:AAPL) Home app as well as Microsoft's (NASDAQ:MSFT) decision to allow third-party developers to use Cortana can fix that problem. Instead of one company trying to develop devices as well as the technological means for them to communicate with one another, they can use third-party software. This software can communicate with other devices using that software, even if the devices were not built by the same company.

Investors should be looking at Microsoft to begin with as Microsoft is also heavily involved with the cloud. But also pay attention to home device manufacturers and see which software they will use to make the Internet of
Things a reality.

Self-driving cars and the automobile industry

The development of the autonomous car, in a sense, represents the culmination of other technological advancements. Cloud technology will provide cars with the computing power to detect hazards, artificial intelligence will interpret the data, and these cars may someday be able to communicate with one another to avoid accidents.

But while tech companies like Google (NASDAQ:GOOGL) are making progress towards autonomous cars, I would recommend General Motors (NYSE:GM) if you want to bet on autonomous cars in the imminent future.

While there are some concerns about the automobile industry in light of flat sales, GM’s stock has climbed since the presidential election. GM has made significant investments both towards electric and autonomous cars with the Chevrolet Bolt, a long-distance electric vehicle, coming out next year. While the idea of Google being an auto manufacturer is interesting, GM and other actual auto manufacturers know how to make and market cars better than Google does.

Autonomous cars will be here soon and the companies that can produce the best models first will gain a huge advantage. But auto manufacturers like GM will likely profit the most compared to more orthodox tech companies.

Innovation is the future

There are so many other areas in the tech sector which can dramatically change our lives, from the development of artificial intelligence and automation, to TV technology featuring OLED and ULED screens. What is most important is that in 2017, innovation will remain the name of the game. The companies that make the biggest investments to change our lives will reap the biggest rewards.There is a lot of uncertainty around the tech market given the current financial and political climate, but companies that innovate well will perform no matter what. Look at large companies promising big results like Amazon and try to jump on now.

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