The Global Research report for March reveals that 33% of eurozone investors are overweight technology, an increase of 23 percentage points since February.
The sector was named as one of the most undervalued in January, at 86% of fair value, by Morningstar. Associate director of tech equity research Grady Burkett cited Apple, Intel, Oracle, Applied Materials and Check Point Software Technologies as being the most undervalued stocks at the time.
Since then, Apple has announced that it would begin paying dividends for the first time since 1995, while other large firms such as Dell and Cisco have been putting excess cash to work through acquisitions, and money has been pouring into the sector.
Burkett said: “The mega-trends of cloud computing, mobility, and consumerisation march on, opening new profit pools and solidifying competitive advantages for certain firms and industries while forcing others to adapt quickly. These trends will continue to drive near-term spending, even if the demand environment weakens, and firms that are positively exposed to these secular forces will post solid operating results over the next few years.”
Sub-sector specific opportunities
In terms of specific assets, cable tv, broadband and mobile platform ecommerce stocks have been cited as attractive purchase options given technological advances, and the increased popularity of mobile devices including smart phones and tablets.
Consolidation in the cable and broadband arena, meanwhile, is becoming increasingly likely, and the value of Virgin Media as one example was made evident with the announcement that US-based Liberty Global had launched a take over bid for the firm.
Dominic Byrne, investment director at Standard Life Investments, said: “We have significant holdings in both Google and eBay which we see as winners both in terms of ecommerce and mobile advertising.
"Cable networks are also of interest given the technology advantage over copper wires allowing consumers much faster broadband speeds and richer TV content. We think that mobile operators should be able to take advantage of the opportunity to improve their offer and reduce costs by offloading data traffic onto much cheaper cable networks and see mobile-only networks at a competitive dis-advantage going forward."
