Tech Sector Outlook 2017: What Investors Should Know

Tech Sector Outlook 2017Tech Sector Outlook

The wonderful part about investing in technology is that you are betting on the future. No other industry holds the potential to have such a profound influence on the way we live our lives, and no time in history has been so rife with technological advancement. As such, the tech sector outlook is a positive one, and the tech forecast for 2017 will make a good deal of money for investors who play their cards right.

In this piece, we’ll examine some of the best areas of development to invest in and some of the companies operating in those spaces. I’ll flesh out my tech sector predictions as well as a 2017 technology industry outlook more broadly.

Below, you’ll find some of the most exciting trends in tech, touching on everything from venturing into space to machines that can out-think humans. Investing in and of itself can be a thrill, but rarely are the companies equal in excitement to the financial prospects. Not to demean getting a dividend from a company like The Coca-Cola Co (NYSE:KO), but it doesn’t quite hold the same kind of draw as artificial intelligence, does it?

Technology Sector Analysis

So let’s get a lay of the land of some of the bigger areas that are likely to see massive gains in our tech sector outlook 2017 review.

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Take, for instance, augmented reality (AR) and virtual reality (VR). A great example of the industry-rattling power of these new technologies can be found  in an AR video game, Pokémon GO.

Consumers spent a total of $41.0 billion on mobile games in 2016, and a huge driver of that success was the AR video game Pokémon GO. Coupled with a well-known and cherished property in “Pokémon,” Pokémon GO allowed players to travel the real world and use their phones to project pocket monsters everywhere, from their local grocery stores to outdoor parks, and, sometimes, less-appropriate places like cemeteries. (Source: “Market Brief — Year in Review 2016,” SuperData, last accessed March 22, 2017.)

Pokémon GO was the first taste of what companies can accomplish in the AR tech market.

Another burgeoning area of technology is in space, led by none other than Elon Musk’s brainchild SpaceX.

The company recently completed a historic mission, reusing a rocket for the first time ever. This is a massive leap forward in space tech, as building a rocket from scratch each time you want to travel into space is one of the primary reasons it’s so expensive to exit Earth. With the newest technological leap, this could drastically reduce costs for shipping goods into space, and with SpaceX on the cutting-edge of these technologies, that could be a huge boon for that company.

ALL Tech stock chart

Chart courtesy of StockCharts.com

While SpaceX is not on the market, Musk recently folded his solar panel company, SolarCity Corp (NASDAQ:SCTY), into Tesla Inc (NASDAQ:TSLA). There is potential that we may see SpaceX enter the market on its own or join Tesla to help bolster the car company, either of which could be a huge boon for the TSLA stock price.

Speaking of Tesla, the company is also on the cutting-edge when it comes to another industry primed to explode in 2017: autonomous vehicles.

The race to build a car that drives itself has been undertaken by many companies, both on the software side and the hardware side. Tesla plans to do both, and if it is able to effectively roll out a fleet of self-driving, state-of-the-art Teslas at an affordable price point with the “Model 3” (planned to begin production in 2017), then TSLA stock could be one of the best tech sector investing opportunities 2017.

Considering that Tesla has also now topped Ford Motor Company (NYSE:F) in market cap, you have what could be the next dominant car producer. (Source: “Tesla is now worth more than Ford after delivering a record number of cars for the quarter,Recode, April 3, 2017.)

Moving on, another very exciting development in the tech sector outlook 2017 is in the AI space.

Artificial intelligence was previously confined to the boundaries of our imagination and as fodder for science fiction tales. But as we continue to develop computing power, machine learning, deep learning, and other technologies surrounding machine development, expect to see AI technology continue to make steady progress. And once it does eventually outpace humans, the company that is first able to achieve that milestone is likely to claim market dominance in what maybe the single most important creation in human history up to this point.

Some key players to watch in this sector include Google-parent Alphabet Inc (NASDAQ:GOOG) and its “DeepMind” creation, Amazon.com, Inc. (NASDAQ:AMZN), and Microsoft Corporation (NASDAQ:MSFT), among others.

A final addition to the 2017 technology industry outlook is the rise of tech empires. From Amazon to Google to Apple Inc. (NASDAQ:AAPL), companies are hardly resting on their laurels.

Both Google and Apple have been rumored to be developing self-driving vehicles, while Amazon is attempting to create automated grocery stores without check-out lines, cashiers, or even humans.

While companies have always branched out into a variety of revenue streams, tech is taking that idea to a whole other level. By trying to develop AI technologies, automated vehicles, streaming empires, delivery empires, AR, etc., these companies are not looking to build on their already strong foundations, but rather establish entirely new industries to take advantage of.

Tech Industry Trends

We’ve covered some of the biggest developments technology-wise in the industry, but what about tech industry trends and tech sector predictions?

At this point, the tech sector outlook looks largely like it did in 2016, which is to say that is on the rise.

The gaming industry is booming, with behemoths like Activision Blizzards, Inc. (NASDAQ:ATVI) and Electronic Arts Inc. (NASDAQ:EA) showing strong gains in 2017 so far, paired with excellent growth in 2016.

All the companies mentioned in the section above have also experienced great 2017s so far, with trend lines looking like they will continue upward for the foreseeable future.

The computer chip craze of 2016 appears to have slowed some, but Advanced Micro Devices, Inc. (NASDAQ:AMD) is still proving to be a strong stock with high growth potential on top of already solid gains in 2017.

In terms of tech sector predictions, expect all these companies to continue to grow while they remain ahead of the competition in innovation. That is, after all, the name of the game when it comes to technology.

But perhaps the most interesting development that may affect the tech sector outlook in 2017 is the presidency of Donald Trump.

Trump is hardly a well-liked figure among the liberal-leaning Silicon Valley techies, but so far, his presidency has been a boon to the overall economy, with the tech industry benefiting as much as anyone else.

While Trump has emphasized several policies that members of the tech community have taken issue with, like the travel ban, we’ve seen some interesting partnerships arise from the Trump administration within Silicon Valley (Elon Musk and Peter Thiel, come to mind). And if the tech company in question can fit into Trump’s American manufacturing jobs plan—as Tesla seems to have—then you have what may prove to be, however unlikely, a tech industry-loving president.

The development of the relationship between Donald Trump and the tech industry will have a large impact on the tech sector outlook 2017.

Tech Sector Forecast for 2017

I expect the industry to see huge gains for whatever companies are focusing on autonomous vehicles and AR/VR tech.

While the other sectors I mentioned will undoubtedly be strong stock movers going forward, they are still in the speculative stages of their development, whereas AR and autonomous vehicles are close enough that they have the power to drastically alter the investing landscape in 2017.

The tech forecast for 2017, therefore, would have to include TSLA stock, AMD stock, GOOG stock, AAPL stock, AMZN stock, and ATVI stock as those with the biggest potential to make waves in 2017 due to their connections to some of the most exciting industries in the entire market right now.

Tech Sector Investing Opportunities

There are a great many investing opportunities for the savvy investor, especially when looking at the tech sector outlook 2017.

Companies are rife with potential to capitalize on a number of different technologies, each with the power to explode onto the scene in 2017 and create totally new industries.

With Apple’s focus on AR tech, for instance, expect that stock to see a huge jump in value if the “iPhone 8” can deliver on all the hype and provide consumers with the latest in AR technology.

Tesla is also poised to take advantage of 2017 with its Model 3 production beginning and the opening of its massive “Gigafactory” in Nevada. As it continues to push towards innovation expect TSLA stock to be rise in tandem.

While still in the early stages of development, Google’s AI technology is also an up-and-coming power play that could see GOOG stock soar if new milestones are achieved in 2017.

The 2017 technology industry outlook is extremely positive, with most companies (excluding those in the wearable tech market, which has collapsed) looking to make strong gains this year.

With that in mind, a key to investing among these market juggernauts is to keep an eye out for which company is best placed to capitalize on innovation, because these are exactly the types of companies that you want included in your portfolio.

From Tesla to Google to Apple to AMD to Amazon, there’s no shortage of powerful tech companies that are looking to have dramatic effects on our world, both today and tomorrow. As they continue to change the way we live our lives, expect to see their stock prices rise in kind during 2017.