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At the time, I pointed to 2020 as the year "tech saved America," but the truth is that technology's massive impacts and the changes they wrought continued into 2021 and are in fact still with us today.
From its March 2020 lows of 6,879, the tech-centric NASDAQ Composite has zoomed more than 126%. My Nova-X Report subscribers got the chance to bank 16 double- and triple-digit winners on tech stocks alone, with gains running from 10% to 213% in 2021, and our overall performance beat the NASDAQ by nearly 15%.
Our 2021 gains came from seemingly every corner of the $5.2 trillion-plus global tech sector, but I anticipate 2022 will be a little different.
To be clear, tech will still be a huge boon to the United States' economy and its people, but I don't foresee the same blazing returns coming from so many diverse tech segments this coming year.
For one thing, there's omicron to contend with - many experts agree this wave will "burn" intensely and peak quickly, by the middle to end of this month, after which sectors like aerospace, which have begun to slide in recent weeks, may rebound.
We still have highly inflationary conditions on the ground, too, with prices increasing at a rate not seen for 39 years; outlays for items like food, furniture, and energy are rising much faster than the 6.8% increase in the consumer price index (CPI). Some of these new price increases may be somewhat temporary and should ease in the second half of the year as we work out global supply chain issues.
Don't get me wrong: I'm incredibly bullish about tech in 2022, but I also know we'll have to be very selective, and the issues I just pointed out will actually act as catalysts for gains over the coming year.
With all of this in mind, I'm looking at two tech segments in particular that will drive an even bigger share of tech investors' profits in the year ahead.
Here's where you want to concentrate your tech-investing dollars this year...
I'm Even More Bullish on Chips in 2022
Semiconductor chips certainly proved their importance in 2021. If you had any doubts, just look at what happened to car sales.
Because of low chip supply and shipping problems, car sales fell 14.7% from 2019 levels to a total of roughly 14.5 million units in 2020. By this past October, just 13 million cars had been sold, putting the market off pace once again.
The drop in car sales is by no means due to decreased demand. Rather, car manufacturers simply can't make enough of the things because they can't lay into adequate supplies of computer chips.
The situation is such that we're seeing things that might've been unthinkable just five or 10 years back: Old-line, legacy automakers, like Ford Motor Co. (NYSE: F) and General Motors Co. (NYSE: GM) are now involved in making their own semiconductor chips.
Ford, in particular, has just inked a deal with Silicon Valley-based Globalfoundries Inc. (NASDAQ: GFS). The deal secures priority access for Ford, and before long, the two companies - carmaker and chip maker - will produce semiconductors jointly.
With new cars requiring ever more chips for all their new safety features, automation, charging tech, and so on, the importance of these chips will only grow.
And even beyond autos, chips are due for a strong rebound in the second half of 2022 as the supply chain eases.
We're already seeing a lot of new investment in the sector that will shore up supply. Samsung Electronics Co. Ltd. (OTC: SSNLF) is building a $17 billion semiconductor plant in Texas, while chip giant Taiwan Semiconductor Manufacturing Co. Ltd. (NYSE: TSM) is spending $12 billion on a new chip factory in Phoenix.
This growth is the proverbial drop in the bucket. The Semiconductor Industry Association reported a 20% increase in chip sales in 2021, with totals approaching $553 billion. The SIA is confidently projecting total chip sales will top $600 billion this year, which would be an increase of nearly 9%. That's not the double-digit growth of 2021, but it's still impressively strong, and this sector should be among the top destinations for savvy tech investors in 2022.
But it's by no means the only source of tech-sector profits...
Fintech Will Outperform Again This Year
After a strong 2020 and 2021, financial technology - "fintech" - will continue to change and redefine the way we interact with money in 2022.
We have three trends driving the fintech market headlong into 2022.
First is the relentless rise in contactless payments, a place where Square, now Block Inc. (NYSE: SQ), has dominated and will continue to do so. In 2018, long before the pandemic, the sheer number of contactless payments conducted worldwide grew 72%, and it hasn't looked back. Omicron all but assures continued growth here.
Omicron may well peak and pass quickly, we hope, but tens of millions of new and existing small businesses will want to expand their contactless payment capacity; no one wants to pay for terminals and infrastructure anymore.
Researchers at IdeaSoft predict U.S. contactless payment market revenue will grow from $111 billion this year to $148 billion in 2022, and reach a staggering $358 billion in 2025.
The second trend driving the fintech market next year is the huge growth in Buy Now, Pay Later (BNPL) solutions. BNPL companies are the ones that allow online merchants to offer customers the option to buy a product but split up the payment into segments - painlessly - at checkout.
As you can imagine, BNPL saw a huge boom during the pandemic. Finances were tight, but millions of people had to suddenly buy new laptops, webcams, furniture, and so on to begin working remotely. And because BNPLs are short-term, low-hassle loans virtually on demand, they became hugely popular. Being interest-free, many consumers prefer them over credit cards.
No wonder, then, that FIS Worldpay projects the global BNPL market will grow from $60 billion in 2019 to a whopping $166 billion by 2023. That's an impressive 177% increase in under four years.
And for the third driver, we're seeing a huge rise in digital-only banks. These are sometimes called "neobanks," "online" banks, or "virtual" banks. When the world shut down and people couldn't go to their banks anyway, it became obvious just how much more convenient online-only neobanks could be.
These neobanks have better online services than their traditional counterparts. They also have lower overhead as they don't have to pay for physical branches. What's more, neobanks often offer services old-line banks don't - crypto services, easy consumer loans, and stock trading, to name a few.
Now, if the term neobank is unfamiliar, don't worry: There are some very familiar names in this sector, like Robinhood Markets Inc. (NASDAQ: HOOD). But I think the best name in this space has been and will continue to be PayPal Holdings Inc. (NASDAQ: PYPL) - it's as close to a household name as there is in fintech. We've had the chance to book big profits on PYPL shares in 2020 and 2021. The stock got quite frothy by the last half of 2021 and has since fallen back to Earth from its July 2021 highs above $300. But I don't think the gains are finished here, and this is a stock I expect will have a strong 2022.
But as impressive as fintech and chip profits could be this year, I think the serious profit potential is in a brand-new tech niche...
This Tech Breakthrough Could Blow Away All Others in 2022
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About the Author
Michael A. Robinson is a 36-year Silicon Valley veteran and one of the top tech and biotech financial analysts working today. That's because, as a consultant, senior adviser, and board member for Silicon Valley venture capital firms, Michael enjoys privileged access to pioneering CEOs, scientists, and high-profile players. And he brings this entire world of Silicon Valley "insiders" right to you...
- He was one of five people involved in early meetings for the $160 billion "cloud" computing phenomenon.
- He was there as Lee Iacocca and Roger Smith, the CEOs of Chrysler and GM, led the robotics revolution that saved the U.S. automotive industry.
- As cyber-security was becoming a focus of national security, Michael was with Dave DeWalt, the CEO of McAfee, right before Intel acquired his company for $7.8 billion.
This all means the entire world is constantly seeking Michael's insight.
In addition to being a regular guest and panelist on CNBC and Fox Business, he is also a Pulitzer Prize-nominated writer and reporter. His first book Overdrawn: The Bailout of American Savings warned people about the coming financial collapse - years before the word "bailout" became a household word.
Silicon Valley defense publications vie for his analysis. He's worked for Defense Media Network and Signal Magazine, as well as The New York Times, American Enterprise, and The Wall Street Journal.
And even with decades of experience, Michael believes there has never been a moment in time quite like this.
Right now, medical breakthroughs that once took years to develop are moving at a record speed. And that means we are going to see highly lucrative biotech investment opportunities come in fast and furious.
To help you navigate the historic opportunity in biotech, Michael launched the Bio-Tech Profit Alliance.
His other publications include: Strategic Tech Investor, The Nova-X Report, Bio-Technology Profit Alliance and Nexus-9 Network.