The year 2021 is in the rear-view mirror, and what a year it’s been.

Despite vaccine rollouts early in the year, COVID-19 proved to be more durable than many expected. After a steep decline at the end of winter, it looked like the end was in sight. Then came the Delta variant. That and rapidly waning vaccine protection meant we saw a resurgence starting over the summer.

Right now, we’re coming to grips with the newer Omicron variant. Fortunately, available information suggests that this variant, while more transmissible, is far less deadly. If that’s the case, this might be the COVID-19 variant we’ve all been waiting for… the one that mutates into a milder form, as viral outbreaks generally do.

If so, we will end up with something akin in severity to the common cold that circulates indefinitely. That’s far from an ideal situation, but it's definitely a better one than what we had with the earlier, deadlier strains.

The year was also a lesson in real-world economics. What happens when the unstoppable force of huge unprecedented monetary and fiscal stimulus strikes the immovable object of supply shortages? Inflation!

When rising inflation started taking a bite out of everyone’s budget earlier in the year, many predicted the demise of tech stocks. In some cases, we’ve seen technology stocks underperform relative to the market, such as the formerly highflying but not yet profitable names contained in Cathie Wood’s ARK ETFs. But in many other cases, we’ve seen tech stocks soar.

That’s been especially true of many semiconductor names. A semi supply crunch means profits are rising. This environment drove the PHLX Semiconductor Index (SOX) to all-time highs in 2021, with gains of about 37% for the year.

Better yet, the prospect of steep demand going forward even after the crisis is over will continue to drive gains for semiconductor companies in 2022. The Semiconductor Industry Association expects the semiconductor market to grow by nearly 9% in 2022 to reach a record of over $600 billion in revenues.

The companies responsible for the design and development of microchips are those participating in the most powerful technology trends going into 2022. They have the best shot at growth during what will prove to be one of the most disruptive decades in history.

To a bright future,

Ray Blanco
Chief Technology Expert, Technology Profits Daily
AskRay@StPaulResearch.com