The technology sector is the largest single segment of the market, eclipsing all others (including the financial sector and the industrials sector). More than anything, technology companies are associated with innovation and invention. Within the huge and unwieldy world of tech, it is possible to look at four key "mega sectors:" semiconductors, software, networking, and hardware.
Software
Without software, nothing much happens in the modern world. Software is everywhere and is present in critical components of everything from pacemakers to cars, but none of those devices can do much of anything without software. As such, it is not surprising that software is a huge industry as well – on the order of hundreds of billions.
Networking and Internet
Networking, great and small, is arguably the biggest tech innovation since the microchip. The creation of networks has not only significantly improved efficiency within companies, but the internet itself. Broadly speaking, investors can divide their attention between those companies focusing on the consumer (B2C, business-to-consumer) and those that focus on "behind the scenes" business conducted between businesses (B2B, business-to-business).
Hardware
Although the software is increasingly replicating the functions of many pieces of hardware, there is still a major market for many types of hardware and the sector is not as obsolete as many believe. Getting a bit more specific, hardware can be broken down into many sub-sectors, including communications equipment, computers and peripherals, networking equipment, technical instruments, and consumer electronics.
Semiconductors
Semiconductors underlie virtually everything else in technology. The semiconductor industry is a huge market on its own, but it is thought to enable four times more in physical products that rely upon those semiconductors.One of the other basic truths of equities is that tech stocks frequently sport higher premiums than almost any other market category. In theory, this high level of valuation is the recognition of the above-average growth rates that successful technology companies post.
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