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PC Sales See Best Growth in 2 Decades: Tech ETFs to Buy

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Sweta Killa
·5 min read
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The personal computer (PC) market has been booming with no signs of slowdown despite the chip shortage. After registering the biggest increase in decades last year, PC sales saw the fastest year-over-year growth in the last two decades for the first quarter of 2021 buoyed by strong demand from consumers working and studying remotely, according to Gartner (read: ETFs to Tap the Sustained Semiconductor Boom).

Overall, worldwide PC shipment surged 32% to 69.9 million in the first quarter with Lenovo leading the way higher with 42.3% year-over-year growth. HP HPQ also recorded strong growth of 34.6% while Dell DELL, Apple AAPL, and Acer rounded out the next three PC manufacturers. From a market share look, Lenovo and HP gained a 25.1% and 21.4%, respectively. Dell, Apple and Acer Group took the third, fourth and fifth spots with 16.5%, 8.0% and 5.7% market share, respectively. Including Chromebooks, the worldwide PC market grew 47% year over year, as Chromebook shipments increased triple digits on investment among educational institutions in North America.

International Data Corp. (IDC) pegged increase of global shipments of personal computers, including desktops, notebooks, and workstations at 55.2% year over year to 84 million units. The strong growth was driven by the continued resurgence in the PC market, increase in average selling prices, growth in gaming, the need for higher performance notebooks in the enterprise, and an increase in demand for touchscreens within the education segment.

Meanwhile, Canalys revealed a 55% year-over-year increase in PC shipments to 82.7 million units in the first quarter, the highest Q1 shipment number since 2012. Shipments of notebooks and mobile workstations increased 79% year over year (read: Technology Regains Momentum: 5 ETFs Leading the Way).

Most analysts project the solid trend to continue in the first half of 2021 due to increasing PC demand though global chip shortage might hinder growth somewhat. 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 continued outperformance:

Vanguard Information Technology ETF VGT

This fund manages about $44.4 billion in its asset base and provides exposure to 341 technology companies that serve the electronics and computer industries or that manufacture products. It currently tracks the MSCI US Investable Market Information Technology 25/50 Index. The ETF has 0.10% in expense ratio, while volume is solid at nearly 520,000 shares. It has a Zacks ETF Rank #2 with a Medium risk outlook.

iShares U.S. Technology ETF IYW

This ETF offers exposure to 160 U.S. electronics, computer software and hardware, and informational technology companies by tracking the Dow Jones US Technology Index. The fund has amassed $7.3 billion in its asset base and charges 43 bps in fees and expenses. Volume is good as it exchanges nearly 946,000 shares in hand a day. About 38% of the portfolio is allocated to software and services, while technology hardware and equipment accounts for 23.3% share. The fund has a Zacks ETF Rank #1 with a Medium risk outlook (read: Best ETF Investment Strategies for Q2 2021).

Technology Select Sector SPDR Fund XLK

This is the most popular technology ETF, which follows the Technology Select Sector Index and has $41.1 billion in AUM. The fund charges 12 bps in fees per year from investors and trades in heavy volume of around 9.1 million shares a day on average. It holds about 74 securities in its basket and is widely spread across software, technology hardware storage & peripherals, semiconductors, and IT services that make up for a double-digit allocation each. It has a Zacks ETF Rank #2 with a Medium risk outlook.

First Trust Technology AlphaDEX Fund FXL

With AUM of $2.5 billion, this fund offers exposure to the broad technology sector by using the AlphaDEX methodology. It follows the StrataQuant Technology Index and holds 108 securities in its basket with software and computer science accounting for 58.2% share while the rest goes to technology hardware and equipment. The ETF trades in good average daily volume of 140,000 shares and charges 61 bps in fees per year. It has a Zacks ETF Rank #1 with a Medium risk outlook (see: all the Technology ETFs here).

MSCI Information Technology Index ETF FTEC

This fund follows the MSCI USA IMI Information Technology Index. It is home to 329 stocks with key holdings in software, technology hardware storage & peripherals, semiconductors, and IT services. The ETF has amassed $5.6 billion in its asset base and charges 8 bps in annual fees from investors. Volume is solid at 330,000 shares a day. It carries a Zacks ETF Rank #2 with a Medium risk outlook.

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HP Inc. (HPQ) : Free Stock Analysis Report
 
Dell Technologies Inc. (DELL) : Free Stock Analysis Report
 
Technology Select Sector SPDR ETF (XLK): ETF Research Reports
 
Vanguard Information Technology ETF (VGT): ETF Research Reports
 
iShares U.S. Technology ETF (IYW): ETF Research Reports
 
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