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Sunday, June 17, 2018

Early Stages Of A Tech Boom

We've been calling for a tech boom for a while. We're busy each day speaking to tech company management teams to figure out who has the best earnings potential for the year.

But when we take a step back the collage starts to form a picture.

We're likely getting confirmation that we're in the early stages of a  potential multi-year tech boom.

Look at this one key stat...

Here's some traditional tech companies that did well in the '90s and, guess what, they are starting to do well all over again.  Why? They are exposed to traditional corporations' buying habits. Those traditional tech purse strings are starting to open up.

Look at this.

Calendar 2017 2017 2017 2018

Q4 A Q1 A Q2 A Q3 A

Jun Sept Dec Mar
MSFT Revs 25,605 24,538 28,918 26819
1yr% 9.1% 11.9% 12.0% 15.5%
2yr% 9.1% 16.8% 14.2% 23.4%





INTC Revs 14763 16149 17053 16066
1yr% 9.1% 2.4% 4.1% 8.6%
2yr% 11.7% 11.4% 13.9% 16.6%

Month
Jul Oct Jan April





CSCO Revs 12133 12136 11887 12463
1yr% -4.0% -1.7% 2.7% 4.4%
2yr% -5.6% -4.4% -0.3% 3.9%

We look at two year growth rates. That means you take this year's growth rate plus last year's same quarter growth rate. That shows you an underlying trend.

These traditional tech heavyweights that have huge exposure to traditional companies are ALL seeing the same thing, a 2-year acceleration.

Microsoft's 2-year growth rate went from 9% to 16.8% to 14.2% to 23.4%
Intel went from 11.7% to 11.4% to 13.9% to 16.6%
Cisco went from -5.6% to -4.4% to -.3% to 3.9%.

There is no coincidence here.

Tax breaks are seeping in to buying budgets.  Also, the economy was stagnant for 10 years. Now that it's finally starting to open up, companies are taking some of that cash to reinvest in tech.

2018's spending is not just going to be limited to tech companies that are exposed to hyperscaler spending. This year's spending is about to broaden out to benefit a wider scope of companies.

That's very bullish.


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