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Technology Select Sector SPDR Fund (NYSEARCA:XLK), which tracks the S&P 500’s information technology sector, rose 56.2% in 2023, comfortably outperforming S&P 500 gain of 24.7%.
The sector with the highest weightage on the S&P consists of companies ranging from Microsoft (MSFT), maker of the Windows operating system, chipmaker Nvidia (NVDA), and cloud company Oracle (ORCL).
Industries 2023 Performance
Software & Services rose 49%, Technology Hardware & Equipment jumped 45%, and Semiconductors & Semiconductors Equipment doubled, soaring 100% in 2023.
U.S. stock fund flows into and out of the technology sector have varied wildly from week to week. The technology-focused ETF had a net inflow of $473.15 million in 2023.
What Top 5 movers in 2023
- Gainers: Nvidia (NVDA) +239%.
- Uber Technologies (UBER) +149%.
- Advanced Micro Devices (AMD) +128%.
- Palo Alto Networks (PANW) +111%.
- Broadcom (AVGO) +100%.
- Losers: Enphase Energy (ENPH) -50%.
- Paycom Software (PAYC) -33%.
- Fidelity National Information Services (FIS) -12%.
- EPAM Systems (EPAM) -9%.
- Juniper Networks (JNPR) -8%.
What Analysts Expect
Seeking Alpha analysts at large consider XLK a Buy. Of the five analysts, one has a Strong Buy rating, two a Buy rating, one a Hold rating, and one has a Sell rating.
According to Wells Fargo, Information technology (XLK), consumer discretionary (XLY), and communication services (XLC) are the only, out of the S&P 11 sectors, that have dramatically outperformed the index on a year-to-date basis.
The investment firm has a neutral rating for tech.
According to Citi, the information technology sector (XLK) remains overweight, with software and services leading in the sector.
“I believe tech remains a strong buy long-term, but I also think right now deserves some caution given current conditions,” said Seeking Alpha analyst Josh Arnold.
What Quantitative Measures Say
XLK secured a Strong Buy rating from Seeking Alpha’s Quant Rating system with a score of 4.53. The ETF scored an A+ for both momentum and liquidity, an A for expenses, but only managed a C+ for risk.
