What should investors in US technology stocks do in 2023?

US stock market has outperformed its Indian counterpart in long term.

investors, US technology stocks, 2023
The problems tech giants are facing are real.

So far in 2022, the Nasdaq 100 index, which represents global technology companies, has lost nearly 33% of its value. The sector’s outlook appears bleak in the face of rising interest rates, leaving investors perplexed on two fronts: should they sell tech stocks in 2023, or is it time to buy or add more tech shares because valuations are currently low?

Investing in the US stocks

From international mutual funds that provide access to the US and other global markets to direct share purchase via NSE IFSC and BSE India INX Global Access platforms to international brokerage platforms such as Vested, Upside AI, and others, Indian investors have been geographically diversifying their portfolios. According to RBI data, remittances for investments in equity and debt increased from $431.41 million in 2019-20 to $746.57 million in 2021-22.

Some investors believe that global tech stock values have already fallen significantly and may now be appealing to purchase at current prices. Many, however, believe that the bull market in global technology stocks has ended for the time being and that the current set of concerns may prevent a bull market in technology stocks from occurring in 2023.

“Investors, if already invested, may hold till the recovery and new investors can look at it as the opportunity,” adds Ashwin Patni, Head – Products & Alternatives, Axis AMC.

Global tech companies

The problems tech giants are facing are real. “Tech companies are coming under increasing pressure to cut costs. Tech giants also disappointed market forecasts, partly due to a slowdown in demand in their cloud computing businesses. And hence have underperformed the wider US market in the recent period,” adds Patni.

Way ahead in 2023

“In 2023, investors in technology stocks should pay close attention to market trends and the overall performance of the technology sector. They should consider the financials, competitive landscape, and future prospects of individual companies,” says Viram Shah, co-founder and CEO, Vested Finance. “They can consider diversifying their portfolios by investing in different upcoming technology stocks, such as those related to artificial intelligence, cloud computing, and cybersecurity.”

A rally in tech stocks across the board is not looking likely next year, more so among the FAANG (Facebook’s parent company Meta Platforms, Amazon, Apple, Netflix, and Google parent Alphabet) stocks. Netflix and Meta’s growth has slowed or stopped entirely, while Amazon, Apple, and Alphabet’s massive size makes it unlikely that they will continue to generate the kind of massive returns they did previously.

Still, specific companies may hold promise. “If one is picking a stock (tech or otherwise) based on its fundamentals, the decision should solely depend on factors that affect the business and impact terminal value materially,” says Atanuu Agarrwal, co-founder, Upside AI.

Global diversification may still remain the best bet to safeguard portfolios from macroeconomic risks across nations. “Over a long period of time (10 years-plus), the US stock market has consistently outperformed the Indian stock market in terms of returns,” says Swastik Nigam, founder & CEO, Winvesta.


Investors, if already invested, may hold till the recovery and new investors can look at it as an opportunity to buy

A rally in tech stocks across the board is not likely next year, more so among the FAANG stocks

Pick a stock (tech or otherwise) based on its fundamentals

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First published on: 28-12-2022 at 00:05 IST
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