A nearly insatiable appetite for the latest personal electronic devices should enable the information technology sector to maintain positive momentum for the next year.
Apple’s blowout second quarter, which topped Wall Street expectations for both revenue and profit, is the latest affirmation of the power of the consumer in driving tech results.
The world’s most valuable tech company saw iPad sales more than double, while iPhone sales rose close to 90 percent. And the best could be yet to come as tech researcher Gartner projects tablet sales to increase 98 percent in 2012, with Apple expected to capture more than 60 percent of the market.
Apple’s success is lifting its entire supply chain, which includes well-known chipmakers Qualcomm, Broadcom and ARM Holdings. Smartphone rival Samsung is having a similar salutary effect on its suppliers.
ETFs targeting the semiconductor sector such as SPDR S&P Semiconductor are good ways to leverage the growing ubiquity of mobile Internet devices.
Deutsche Bank analyst Ross Seymore recommends overweighting semiconductors, as they appear to have reached a cyclical bottom in the first quarter and should see improved results the rest of the year. One of the strongest end markets will be handsets, which includes suppliers to Apple and the other smartphone giant, Samsung.