Charlie Chai, portfolio manager at Fidelity Investments, discusses investment trends and opportunities within the Information Technology sector. Learn more about sector investing at http://fidelity.com/sectorinvesting To see more videos from Fidelity Investments, subscribe to: https://www.youtube.com/fidelityinvestments Facebook: https://www.facebook.com/fidelityinvestments Twitter: https://www.twitter.com/fidelity Google+: https://plus.google.com/+fidelity LinkedIn: https://www.linkedin.com/company/fidelity-investments --------------------------------------------------------------------------- Charlie Chai: We are in the midst of an exciting time within technology. Innovative ideas are disrupting the tech landscape, changing the way businesses operate and how people behave. Within the sector, there is an ongoing mega shift away from hardware towards services, Internet and software. There are three themes I'm very excited about. First, cloud computing and software-as-a-service is a megatrend that remains in its early innings. Cloud delivery supports the latest consumer devices, like the iPad®, and is accessible from almost anywhere. Secondly, Internet advertising and e-commerce continues to garner significant dollars and attention since it's at the cross section of social media and mobile access. Lastly, multi-year opportunities exist in number of emerging technologies, such as mobile applications, automation, robotics, wearable technology and 3D printing. Can you talk about mobile connectivity and the proliferation of connected devices? By 2020, it's estimated that there will be over 26 billion connected devices, which could create enormous value. Faster wireless networks, the rise in social media and the ability to store and analyze data is driving this increase in connected devices. And it’s not just consumer goods like smartphones and home theaters that are connected; it’s complex systems like power plants and transportation systems. This should really change how people, businesses and society interact. This has been termed the “Internet of Things.” Sensors are implanted in physical objects and linked through wireless networks, which aggregate and distribute large volumes of data for analysis. For example, a silicon chip embedded in the ground can monitor crop conditions and adjust the amount of water or fertilizer that is used based on the needs of the plants. The widespread adoption of connected devices will definitely take time, but advances in wireless and computing technology, are putting businesses in a better position to create more targeted, efficient solutions for their customers. Why is the information technology sector an attractive place to invest? There are a number of reasons the technology sector can be attractive from an investment perspective. First, the vast amount of innovation that is taking place, not only in Silicon Valley, but across the globe. This is helping to expand the opportunity set. It wasn’t that long ago that a radio, a camera, a camcorder, a walkman, and a telephone couldn’t fit into one’s pocket. Today a smartphone performs all these functions AND fits in the palm of your hand. Secondly, the breadth and depth of the sector creates an appealing investment universe, from small growing emerging tech firms to large, stable cash cows. Also, a growing global market place for technology may lead to continued penetration of web-enabled devices across the U.S., developed and emerging economies. And finally, the tech sector looks attractive from a fundamental and valuation perspective. The sector has emerged from the Internet bubble with improved balance sheets and record amounts of cash, which can be used for acquisitions, or to pay dividends and buy back shares -- all of which can potentially benefit shareholders. In closing, I am currently optimistic on the technology sector over the long term due to the rapid pace of innovation, the breadth of the investment universe, and its sound fundamental profile. Fidelity Brokerage Services LLC, Member NYSE, SIPC, 900 Salem Street, Smithfield, RI 02917 689588.3.0
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