The ongoing coronavirus pandemic, which has led to the global digital shift, has accelerated e-commerce for everything ranging from remote working to entertainment and shopping. This has boosted demand for personal computer (PC) sales in the third quarter.
In fact, PC sales witnessed the strongest growth in a decade during the third quarter buoyed by strong demand from consumers working and studying remotely. Overall, PC shipment grew 3.6% to 71.4 million with 90% growth coming from Chromebooks, according to Gartner. Lenovo, the largest PC maker by shipments in the quarter, was the largest beneficiary of the trend with shipments growing 8.3% year over year to 18.3 million. HP
HPQ
, Dell
DELL
, Apple
AAPL
, and Acer rounded out the top five PC manufacturers.
Though the desktop demand was weak, gaming PCs and notebooks with cellular modems remained strong. In particular, graphics cards based on Nvidia’s
NVDA
new GeForce RTX 3080 and 3090 gaming GPUs was on high demand while Sony
SNE
and Microsoft
MSFT
also saw strong pre-orders for their next-generation consoles (read:
Video Gaming Thrives in Pandemic: 3 Top ETFs to Gain
).
International Data Corp. (IDC) pegged the PC shipment increase at 14.6% to 81.3 million units. Gaming, Chromebooks, and in some cases cellular-enabled notebooks were the bright spots during the quarter. Per the research firm, Apple saw the largest growth of
38.9%
, followed by 29.3% rise for Acer PCs. Lenovo and HP saw growth of more than 11% each. Meanwhile, Canalys revealed a 12.7% year-over-year increase in PC shipments to 79.2 million units in the third quarter. Shipments of notebooks and mobile workstations grew 28.3% year over year. Taiwan’s Acer was the biggest beneficiary with PC shipments rising 15%, followed by Apple’s growth of 13.2%. Lenovo shipped 19.3 million PCs, up 11.4% from the year-ago levels.
Given the second wave of COVID-19 and no immediate signs of available vaccine, PC market is expected to remain strong for the rest of the year. As such, investors could ride out the splurging PC market with the technology ETFs, which have a solid Zacks Rank #1 (Strong Buy) or #2 (Buy) suggesting their outperformance to continue:
iShares U.S. Technology ETF
IYW
This ETF offers exposure to 157 U.S. electronics, computer software and hardware, and informational technology companies by tracking the Dow Jones US Technology Index. The fund has amassed $6 billion in its asset base and charges 43 bps in fees and expenses. Volume is good as it exchanges nearly 173,000 shares in hand a day. About 40% of the portfolio is allocated to software and services, while technology hardware and equipment accounts for 24.9% share. The fund has a Zacks ETF Rank #1 with a Medium risk outlook (read:
ETFs Popping on Apple and Amazon Events
).
iShares Expanded Tech Sector ETF
IGM
This ETF tracks the S&P North American Technology Sector Index, giving investors exposure to 295 hardware, software, Internet marketing, interactive media and related companies. The fund has AUM of $2.7 billion and charges 46 bps in annual fees. It trades in a moderate volume of nearly 59,000 shares in hand a day and has a Zacks ETF Rank #2 with a Medium risk outlook.
Invesco DWA Technology Momentum ETF
PTF
This fund follows the Dorsey Wright Technology Technical Leaders Index, and provides exposure to 38 companies that are showing relative strength (momentum). Software is the top industry with 53% share while semiconductors take 22.1%. The product is relatively illiquid and unpopular with AUM of $328 million and an average daily volume of 25,000 shares. It charges 60 bps in annual fees and has a Zacks ETF Rank #2 with a High risk outlook.
SPDR S&P Software & Services ETF
XSW
This fund targets the software and services segment and follows the S&P Software & Services Select Industry Index. It holds 169 stocks in its basket, charging 35 bps in annual fees. About half of the portfolio is dominated by application software, while data processing & outsourced services, and systems software round off the next two spots. XSW has accumulated $268.2 million and trades in an average daily volume of 20,000 shares. It has a Zacks ETF Rank #1 with a High risk outlook.
John Hancock Multifactor Technology ETF
JHMT
This fund focuses on the time-tested multifactor approach that emphasizes factors (smaller cap, lower relative price, and higher profitability) that academic research has linked to higher expected return. It follows the John Hancock Dimensional Technology Index, holding 145 stocks. The software segment has the largest allocation in the fund’s portfolio at 36.8%, while semiconductors & semiconductor equipment takes 32.2% share. The fund has accumulated $42 million in AUM while charging 40 bps in fees per year. Volume is light at around 2,000 shares a day. JHMT has a Zacks ETF Rank #2 with a High risk outlook (see:
all the Technology ETFs here
).
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