Thanks to the coronavirus-led lockdowns across most countries, the trend of work-and-learn-from-home has picked up steam. At least, the service and education sectors are containing the economic and social impact of the pandemic in this manner.
The trend bodes well for the computer industry as sales of PCs, laptops and other kind of computer peripherals are on the rise. Demand for computers at both commercial and retail levels is soaring.
Along with the rising computer sales, demand for Internet services has been growing as well. In any case, Cloud was an emerging concept even before the lockdown as companies were discarding their own servers and shifting to the cost-effective renting model, giving huge businesses to mega cloud owners like Amazon AMZN, Microsoft MSFT and Alphabet GOOGL) (read: ETFs to Gain on Cloud Computing Growth Amid Coronavirus Crisis).
Now, the virus outbreak has ballooned its demand. Microsoft has seen a whopping 775% surge in its Cloud services in regions under lockdown. LogMeIn Inc. LOGM, a maker of remote-connectivity software, saw 10 times higher usage of its videoconferencing and meeting tools from the pre-outbreak levels.
Rising computer sales and cloud computing are boosting sales of chips materially. After all, “data centers need bigger pipes to carry the traffic,” said analyst Park Sung-soon at Cape Investment & Securities, quoted on Reuters.
Against this backdrop, below we highlight a few industries that stand to gain amid growing work-from-home trend.
The above discussion makes it clear that semiconductors are in high demand now, with China playing the lead role. Cloud companies are “allowing new and existing customers to use more resources for free to help maintain operations,” said analyst Yih Khai Wong at Canalys.
On Apr 6, South Korea, which houses the world’s biggest memory chip maker Samsung Electronics Co Ltd, reported a 20% jump in semiconductor exports over the past month, per Reuters. All these should boost Intel INTC and iShares PHLX Semiconductor ETF SOXX.
This is a much-discussed area. WisdomTree Cloud Computing Fund WCLD, Global X Cloud Computing ETF CLOU and First Trust Cloud Computing ETF SKYY stand to gain in the coming days. Coming to stocks, apart from mega cloud owners, investors should take note of the likes of Adobe Inc ADBE and Salesforce.com inc. CRM (read: 6 Industries & Their ETFs to Protect You from Virus in Q2).
Data Center REITs
Data center REITs own and manage facilities that help customers safely store data. These REITs provide continued power supplies, air-cooled chillers and physical security. The boom in cloud business should support the space. This puts spotlight on Pacer Benchmark Data & Infrastructure Real Estate SCTR ETF SRVR (read: What's Behind the Recent Rally in Real Estate ETFs?).
Rising computer sales should put electronic retailers in a sweet spot. Notably, several electronic retailers in Canada remained open with reduced store hours. According to analysis done by ACI Worldwide, global online retailers saw a 26.6% year-over-year surge in electronics sales in March. No wonder, electronics retailers with online presence like Amazon, Wal-Mart WMT, BestBuy BBY, AliExpress.Com of Alibaba BABA and eBay EBAY will gain from the trend.
While Amazon, Alibaba and eBay have considerable weights in ProShares Online Retail ETF ONLN, investors can tap Wal-Mart and Best Buy through First Trust Nasdaq Retail ETF FTXD.
The ACI Worldwide report also indicated that sales for home products and furnishings surged 97% in March. Wayfair W, the online seller of home goods products, saw its gross revenues double in March. The demand for products like home office furnitures and mattresses has strengthened at Wayfair. The news sent its shares rallying 41% on Apr 6. The stock has about 4.35% weight in the ETF ONLN.
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