Investors have been very excited with news coming from semiconductor companies. Figures are good and forecasts positive. For instance Intel, the reference in this field, raised again its forecasts recently.
As the economic environment i
s improving in the US, even if the unemployment level is still a problem, companies increase their investments and the technology industries get globally benefits of that. At the same time a certain number of problems have been solved. It is the case for instance in the telecom industry. Companies like MCI (former Worldcom) succeeded to settle agreements with their creditors. During many months good news with the telecom industry were coming from mobile operators. Today, fixed line operators appear in much better shape. Even if the MSCI Telecommunication Index has been negative in August (-0,69%), analyst know that the worst in this area is probably behind.
Outlook
At the same time, investors keep in mind 2 major questions. First, is the economic growth going to speed up as expected by some economists?
Secondly, what to think about the strong progress of tech indices since the beginning of the year ? 32% for MSCI Information Technology index, more than 64% for the Semiconductor one… Sure, those shares reached a very low level during 2001 and 2002, but now they are perhaps going too high too fast.