Curtis Couillard
Jan 1, 2025
"Overview of the Tech Sector"
Tech Sector- December 2024
A Little Background
The technology sector continued its strong performance in December 2024, maintaining its momentum from earlier in the year. This performance was driven by significant gains in key sub-sectors such as semiconductors, software services, and hardware equipment. Despite some market fluctuations, the tech sector remained a top performer, outpacing many other industries.
Tech Sub-Sectors this month
1. Semiconductors and AI Infrastructure:
The semiconductor industry, particularly companies involved in AI infrastructure, saw substantial growth. Major investments in AI have propelled companies like NVIDIA, which reported a year-to-date performance of 187.18% as of November 29, 2024. Other semiconductor firms such as Marvell Technology and Broadcom also showed strong returns.
The demand for AI-driven solutions and increased digitization across various industries have been critical growth factors. This demand is expected to continue, with a focus on expanding AI applications and improving infrastructure.
2. Software and Services:
Companies providing software and services, especially those involved in cybersecurity, cloud computing, and data analytics, experienced robust growth. The diversification within this sub-sector allowed for resilience amid economic fluctuations.
Firms such as Fortinet and Trade Desk Inc have benefited from the increasing need for advanced cybersecurity measures and efficient advertising solutions, respectively.
3. Hardware and Equipment:
The hardware segment also performed well, driven by continuous innovation and the release of new products. Companies like Apple and Arm Holdings contributed significantly to the sector's gains with strong market performances.
Our Outlook
Volatility and Valuations: Despite the positive performance, the tech sector faced challenges related to high valuations and market volatility. High valuations have set a high bar for earnings expectations, and any deviation can lead to significant stock price adjustments.
2025 Projections: Our outlook for 2025 remains optimistic, with continued investments in AI and digital transformation anticipated to drive growth. The semiconductor industry, in particular, is expected to benefit from resolving oversupply issues and increased demand for AI applications across various devices.
What we are doing with our money here at BayMar
AppLovin (APP)
AppLovin is an AI engine that utilizes AI to create efficient and specific advertising for companies to implement and grow their platform. Target areas of advertising are mobile apps and TV streaming. Also provides other tools to help scale an online business. Entered the market in mid 2021 and really took off this past summer as it has grown almost 500% since then, 38% in the past month.
Marvell Technology Inc. (MRVL)
Marvell Technology Inc. designs and produces semiconductor products that are critical for data storage, networking, and connectivity. The company’s products are used in data centers, enterprise networks, and consumer electronics, with a strong focus on high-performance storage, Ethernet connectivity, and custom ASICs (Application-Specific Integrated Circuits). Marvell is also well-positioned to benefit from the growth of 5G technology and cloud infrastructure.
Sources
NerdWallet - Best-Performing Tech Stocks for December 2024
Fidelity - Technology Sector Outlook 2025