As a sector full of continued innovation and huge demand, the Technology, Media, and Telecoms (TMT) market can be particularly ripe for investment, especially if this is an area you haven’t explored before. With communication at the core of companies within the TMT sector, many of the biggest names such as BT and Vodafone are present, but it also contains many interesting start-ups and ones-to-watch. To help, we’ve put together this short guide to TMT investments and why gaining valuable insight into this sector will help provide the best returns.
What is the TMT Sector?
As the name suggests, companies within technology, media and telecoms are grouped within the TMT sector and focus heavily on new technologies. As innovation is at the core of these companies, many exciting developments can lead to potentially profitable shares, especially if investors get in early enough. The potential if a particular company researches and develops a useful tool, product, or service to see large growth from demand makes TMT investment an attractive proposition. On the downside, whilst it can gain spectacular growth, some stocks can also experience huge lows, so predicting what new technologies will thrive isn’t always easy. There are many subsectors of TMT that help to group companies together further, such as computer hardware from the likes of Dell and IBM to software development from Adobe or Intel. There will always be big players within the TMT sector, with some of the most valuable stocks that have stayed dominant including Amazon (AMZN) and Apple (AAPL), but it’s the new emerging opportunities that could represent great returns too.
Trends to Look Out For in TMT
One of the characteristics of TMT companies is that there can be many buyouts, takeovers, mergers, and acquisitions between larger and smaller companies. If a new start-up performs particularly well, one of the larger firms will take note and look to acquire the new technology, potentially providing a boost to its stock price. Of course, spotting the start-ups that could become the next big thing is part of the difficulty when navigating investment opportunities. One example is within software companies as software-as-a-service (SaaS) models are becoming more and more popular thanks to their subscription program generating steady, recurring income. Knowing which SaaS could become the next big thing isn’t easy to predict. TMT stocks attract investors looking at potential growth, those that will outperform the rest of the market, with the view to higher returns in future. The trends tend to be driven by consumer demand for TMT companies’ products and services, so if consumer spend is low, demand can dwindle. Before the effects of COVID-19, investment in the TMT sector had risen throughout the second half of 2019 in both volume and value. A total of $20.66 billion was recorded, an increase of 39% from the first half of the year.
Speaking to TMT ExpertsWith following the TMT trends sometimes complex, it is always recommended to seek expert advice from industry leaders. Those working within TMT companies will provide the valuable human insight needed to make savvy investments. Anticipating the future trends that have the most potential from investment now can be easy to miss. It is worth keeping in mind that back in 2019, almost 90% of startups failed within the first year, so finding the right time to invest in TMT companies is crucial. If timed right and with the help of industry experts, you could achieve the growth you’ve been looking for.
