Tech's Decade Of Innovation At An End? New Data Is 'Sobering'
Over the past ten years, the Technology SPDR (ETF) (NYSE: XLK) has outperformed the Dow by 40 percentage points, returning 92.7 percent. The tech sector's highest fliers -- Facebook Inc (NASDAQ: FB), Amazon.com, Inc. (NASDAQ: AMZN), Netflix, Inc.(NASDAQ: NFLX), Alphabet Inc (NASDAQ: GOOG), popularized by the F.A.N.G. acronym -- had a huge 2015.
Of late, Apple Inc. (NASDAQ: AAPL) investors have been particularly skittish, along with newer IPO-ed names like Fitbit Inc (NYSE: FIT), both of which are down double-digit percentages in the past month.
Tech Bull Market Over?
According to one study, it might be. Highlighted on Wednesday by Statista's Felix Richter, consumer purchase intentions are down significantly across most technology product segments. Richter, noting data from Accenture, explains the phenomenon:
"[C]onsumers are much less inclined to purchase new technology this year than they were 12 months ago. Not only have markets reached a certain level of saturation, but the pace of innovation has also slowed down a bit. Today’s new smartphones, while undisputedly better than they were two years ago, lack the killer features to convince the average consumer of the necessity to upgrade."
The graph above sheds more light on these concerns. Smartphone purchase intentions are down 9 percent year-over-year, while laptop, TV and tablet intentions are down between 6 and 9 percent from this time in 2015.
"The results are sobering, as a decade of innovation and growth appears to be coming to an end," Richter said of the data.
Recent updates from industry leaders corroborate Accenture's study. Apple's iPhone is perhaps the most noteworthy product seeing sales estimates decline across Wall Street. Samsung, too, recently said it expects 2016 to be a weak environment for smartphone and chip companies.
Purchase Intensions Still Up In Select Categories
Of note, consumers aren't shying away from everything tech-related. The aforementioned study indicates niche products like fitness monitors, surveillance products, smart thermostats and drones are becoming more popular.
Traders looking to rotate from traditional tech stocks into these companies can look deeper into the following names:
- Fitbit, fitness trackers
- TASER International, Inc. (NASDAQ: TASR) and Digital Ally, Inc. (NASDAQ: DGLY), surveillance
- Control4 Corp (NASDAQ: CTRL), arguably the only pure play smart home stock on the market
- GoPro Inc (NASDAQ: GPRO), Ambarella Inc (NASDAQ: AMBA) and QUALCOMM, Inc. (NASDAQ: QCOM), involved in the drone space
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