The technology sector had a terrific first-half 2019 despite the U.S.-China trade woes. Notably, the Technology Select Sector SPDR (XLK) has returned 25.9% year to date, outperforming the S&P 500’s rally of 16%.
Tech’s outperformance can be attributed to rapid adoption of cloud computing and strong demand for AI-based solutions. The secular growth trend in data is helping technology companies infuse machine and deep learning into their solutions.
Additionally, increasing allegiance to online gaming, music and video-streaming services is a major growth driver. Improvement in Internet speed and penetration globally deserves a special mention in this regard.
Further, proliferation of IoT that is facilitating connected devices and smart homes is a key catalyst. The accelerated deployment of 5G technology and faster-than-expected growth in robotics set the stage for more development.
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