Will the Slowing Economy Affect IT Spending?
Archives: Investing
“How much of an impact will the global financial turmoil have on the technology field – particularly the telecommunication sector? Hoping to hear from you soon.”
Muneera M.
Hi Muneera,
The answer to that question is actually pretty simple.
The reason the markets have been in a freefall lately is because banks have been unwilling to lend to each other, much less to corporations. So if corporations can’t borrow money from banks, how are they supposed to make upgrades – like improving their IT equipment?
For that reason alone, we should see a slowdown in the technology field (which includes telecommunications). While I won’t say that growth in this sector will disappear, the rapid growth we saw in the past five years won’t be sustainable.
Cash-rich companies that should be immune to this slowdown include Intel (INTC), IBM (IBM), and Nvidia (NVDA).
- Charles Delvalle
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