Enterprises are gradually reducing their massive tech spending, which is driven by a pandemic. The industry faces supply chain disruptions as well as shortages of semiconductor chips. Given these headwinds in the industry, it makes sense to steer clear of fundamentally low tech stocks Plexus (NASDAQ 🙂 or Pegasystems NASDAQ :, which both missed earnings estimates for their most recent quarter. Keep reading. Companies have been spending more on tech for over a year due to the COVID-19 pandemic. This is now slowly falling. Also, supply-chain disruptions and a prolonged semiconductor shortage are marring the industry’s growth. “I think numbers will be solid but won’t show that exponential growth that we saw over the last few quarters,” said Maribel Lopez, principal analyst at Lopez Research. S&P 500 tech companies are expected to report 29% year-over-year earnings growth in the third quarter, a marked slowdown versus the second quarter’s 48% growth.

A shortage of semiconductor chips is hampering electronics production and restricting production capacity of many companies operating in this sector. The industry will continue to be affected by the shortage of semiconductor chips, insufficient supply, and logistical problems until 2022.

These headwinds aside, we believe that fundamentally low tech stocks are possible. Pegasystems Inc (PEGA). Plexus Corp . Avoid (PLXS), as they have not met earnings expectations in the last quarter.

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