Various investors have shown interest in the technology stocks, given the growth potential of the companies. From mobile devices, digital services, to high-end GPUs for gaming, crypto mining, technology is providing all the services that are now necessary for our daily life.
Pros of technology stocks
Various growing companies offer higher returns. Even though the risks cuts both ways, many fast-growing firms in the technology sector offer to boost returns in a low-interest-rate environment.
Secondly, technology companies are continuously evolving. The companies are going through developments and innovations considering the requirements in the market and to stay ahead of their competitors.
Meanwhile, technology companies hold a significant place in the indexes. For instance, over 20% of the S&P 500 index is comprised of technology companies and the performance of the sector somehow controls the overall performance of the indexes.
Cons of technology stocks
Most technology companies tend to pay minimal dividends, generally below 2%.
The risks are also higher, meaning, various companies that have already experienced robust growth may decline in the coming days as the investors shift their focus towards other sectors or smaller companies.