Technology stocks plunged earlier this year due to investors’ rotation to cyclical stocks to capitalize on the economic recovery. But the sector is regaining its momentum on the back of growing demand for advanced technological solutions and the Fed’s decision to leave benchmark interest rates unchanged for now. So, we think the giants in this space—Microsoft (MSFT), Alphabet (NASDAQ:GOOGL), and Facebook (NASDAQ:FB)—could deliver solid returns in the near term. Read on.The shares of companies in the technology industry suffered price slumps earlier this year as investors rotated away from expensive tech stocks to quality cyclical stocks to capitalize on the recovering economy. However, favorable macroeconomic trends and the Federal Reserve’s decision to keep benchmark interest rates near zero have been steering investors’ attention back towards quality tech stocks. This is evident in the tech-heavy Nasdaq Composite’s recent performance. The composite hit its 14,317.66 all-time high yesterday and has gained 5.8% over the past month.
Furthermore, increasing demand for advanced tech products and services amid accelerating digital transformation across industry should keep driving the growth of the technology sector. Indeed, according to GoRemotely, the U.S. tech industry is expected to hit a $5 trillion market value by year’s end.
Given the industry’s solid growth prospects, we think the shares of tech giants Microsoft Corporation (NASDAQ:MSFT), Alphabet Inc. (GOOGL), and Facebook, Inc. (FB) could see a price breakout in the near term.