Global technology: how has the market changed?

The technology sector continues to play a central role in global economic growth, driven by innovations such as artificial intelligence (AI), cloud computing, and the digitalisation of businesses. These developments are reshaping how companies operate worldwide, reflecting a long-term structural shift across industries. For investors, technology is no longer just about growth—it is about where that growth comes from. Technology stocks offer strong potential, along with the ability to adapt to changing market needs and benefit from global innovation.

Despite recent volatility linked to geopolitical tensions and the rapid development of AI, the sector continues to rely on solid fundamentals. Innovation, expansion and profitability remain firmly established.

At the same time, the market is changing. Performance is no longer driven solely by a small group of large US companies. Businesses from other regions are playing an increasing role. Technology is no longer a single story—it is becoming a global ecosystem.

This shift is expanding opportunities and improving diversification. However, concentrating investments in “mega-cap” stocks can increase risk, as performance depends on a limited number of companies.

In this context, diversification remains essential. Spreading exposure across regions and segments—such as semiconductors, software, and payment services—helps balance risk while capturing more opportunities.

How is artificial intelligence creating new investment opportunities in the technology sector?

AI is now a major driver of growth in the technology sector, extending far beyond the handful of well-known companies. Value creation is spreading across the ecosystem—from infrastructure and semiconductors to data platforms, software, and applications—opening opportunities beyond industry giants.

This is changing the investment landscape.

AI is not only driving innovation – it is reshaping business models. It can improve efficiency, enable new services, and transform how software is developed and used. Some companies—previously seen as more vulnerable—may now emerge stronger.

However, the enthusiasm surrounding AI calls for caution. Markets can react sharply, both up and down.

Separating long-term trends from short-term speculation is becoming increasingly important.

Is the technology sector still attractive for investors, or are valuations making it harder to generate returns?

Following a period of robust growth, the technology sector has experienced corrections that have helped bring valuations down to more reasonable levels. As a result, certain stocks are now more accessible to investors, presenting fresh opportunities where prices were previously considered too high.

Large companies that once traded at very high levels have seen valuations normalise. At the same time, attention has shifted towards less well-known segments where pricing is more attractive. The sector remains highly diverse. Some companies still trade at elevated levels, supported by strong growth expectations, while others offer a more balanced mix of potential and pricing.

In this environment, selectivity matters more than ever.

Market dynamics can amplify price movements, particularly in areas such as artificial intelligence. Investor enthusiasm can drive rapid gains—but also reversals.

Focusing on strong fundamentals—robust business models, stable revenues, and long-term profitability—remains key.

How should investors approach technology: individual stocks, ETFs, or active management through a specialised fund?

The technology sector is evolving rapidly and can be complex to navigate. Selecting individual stocks requires expertise, close monitoring, and the ability to anticipate technological, competitive, and regulatory changes.

In this context, active management – entrusting capital to a professional – allows for greater selectivity than an ETF, which tracks a market index. It offers flexibility but typically comes with higher costs and no guarantee of outperformance. As with any investment, risks must be carefully assessed.

Given this complexity, relying on experienced professionals can help investors navigate the risks and opportunities offered by the sector.

Focusing on companies with strong business models, stable revenues, and long-term growth helps investors navigate the sector more effectively.

What matters is depth of research and broad perspective. To identify the most compelling opportunities within the sector, Fidelity International draws on a global technological research team of more than 30 dedicated analysts, alongside an experienced portfolio manager with over 20 years in the sector. Working closely with more than 450 investment professionals across asset classes and regions, they bring insight into how technological change is reshaping businesses globally. Regular dialogue with companies and detailed analysis help build a clearer view of where opportunities—and risks—may emerge. Since 1999, this perspective has been shaped through different market cycles and periods of rapid change in the sector. Today, more than €26 billion is managed using this approach, reflecting a long-standing focus on rigorous analysis, active stock selection, and a selective view of opportunities across technology.

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Important Information

The value of investments and the income from them can go down as well as up so you may get back less than you invest. Performance is not a guarantee for future results. It is essential to carefully assess your objectives and tolerance for risk before making any investment decision.

Fidelity International refers to the group of companies which form the global investment management organisation that provides information on products and services in designated jurisdictions outside of United States of America. Unless otherwise stated all views expressed are those of Fidelity International. Views expressed may no longer be current. Fidelity, Fidelity International, the Fidelity International logo and F symbol are registered trademarks of FIL Limited.