With technology stocks having been some of the fastest-growing names of the past decade, investors might be forgiven for thinking that the best returns have already been had.
As the chart below shows, the MSCI ACWI/Information Technology index has made a total return of 411.35 per cent compared with a 194.85 per cent return for the broad MSCI AC World index.
Performance of indices over 10yrs
Source: FE Analytics
Yet, many believe that the trends that the technology and trends that have driven the sector higher over the past decade will continue to drive sector performance over the next 10 years.
Below, several managers and analysts give their outlook for the technology sector and what they believe could drive the sector higher over the next decade.
“Powerful disruptive change”
David Eiswert (pictured), manager of the T. Rowe Global Focused Growth Equity fund, said connectivity and the use of cloud-based software applications will continue into the next decade and beyond. 
“These are powerful long-term trends, and the markets for consumer and enterprise technology products look set to continue expanding in all regions,” he explained.
Drilling down, Eiswert said investors should attempt to position themselves in segments of the technology trend “that are on the right side of global and regional change”.
“This is crucial in a world of mobile capital, heightened globalisation and rapid technological innovation,” he said.
“Rapid consumption growth and use of the internet, particularly in Asia, has yielded many compelling stories with long runways for growth, while electronic payments technology will be a key enabler over the next decade.”
The T. Rowe Price Global Focused Growth Equity manager added: “The consolidation of the semiconductors industry is also an intriguing opportunity, given the secular growth required in this segment of hardware.”
As such, the manager is likely to take greater exposure to companies specialising in the web-based data services industry, where he continues to see “powerful, disruptive change”.
“The continued adoption of digital technologies within every aspect of society”
The big trend of the next decade for Sarasin & Partners global equity analyst Josh Sambrook-Smith is the influence that digital technology is going to have in every aspect of society and people’s lives.
“Cheap computing, storage and bandwidth has led to genuinely ubiquitous connectivity in the west and permanently lowered the barriers to innovation,” said Sambrook-Smith.
“This enables an astonishing level of creativity; spawning new products, services, business models and technologies that are collectively transforming modern life.”
The ongoing shift to the cloud, more sophisticated data analytics, advances in high-speed communication technologies and semiconductors, “exploding” levels of software intelligence and “the relentless creativity these factors give rise to” will drive the technology sector over the very long run, said the analyst.
However, there are two main risks for investors wishing to get exposure to the next big growth trends in technology: valuation and competition.
“Some companies have very exciting futures and have risen to eye-watering valuations as a result,” the Sarasin analyst explained. “A stock might have a great story but if it’s trading at 50x sales and only breaking-even then you probably have very limited downside protection if something goes wrong.”
Investors shouldn’t believe that high growth rates are always sustainable, for many companies they won’t be, said Sambrook-Smith.
“An inflection point in demand”
Tom Fitzgerald (pictured), manager of the Amity International fund at EdenTree Investment Management, said the advent of cloud infrastructure and machine learning had created an inflection point in demand for technology, as it becomes easier to implement and scale technology at a faster rate and lower cost than ever before. 
“This makes these technologies more applicable and accessible to a broader array of companies across every industry vertical, which in turn drives an increased level of demand for these tools and associated services,” he said.
This is beginning to materialise in corporate fundamentals with the large-cap software companies reporting revenue growth of around 20 per cent.
“This supports our long-term view that over the next decade, technology will capture a larger share of the global economy,” said Fitzgerald.
Nevertheless, the EdenTree manager warned against getting carried away by the hype surrounding tech companies.
“This year is testament to this phenomenon, with 2019 set to be the biggest year for unprofitable initial public offerings (IPOs) since 2000,” he said. “Only about 25 per cent of new listings in the US this year are forecast to become profitable by 2020.
“While a number of these companies boast cutting edge, highly disruptive technologies that are often deeply discounted in order to supercharge revenue growth, many of these firms lack the economies of scale and barriers to entry their promoters claim.”
Fitzgerald added: “This is an issue facing industry incumbents or other, more established technology firms with more substantial resources. In this environment, we stick to our knitting and deploy the same investment philosophy for technology firms as we do for any other sector.”
“Improved speeds and machine learning” 
Finally, Chris Elliott (pictured), co-manager of the Evenlode Global Income fund, said that improved communication speeds will likely revolutionise the prevalence of technology in everyday lives, while machine learning and AI will allow huge amounts of data to be analysed and used to create new services and products.
“Due to the large increase in the volume of data that must be transferred and processed, hardware manufacturers that supply the underlying communication and data-processing infrastructure will benefit from a large amount of government and corporate investment,” said Elliott.
“The providers of centralised data centres and platforms on which the applications will run can also benefit from increasing workloads.”
However, the Evenlode manager said investors should be wary of paying the wrong price for companies although there remain some interesting opportunities.
“Recent tech stock price moves have dramatically reduced the value on offer to investors in the sector,” Elliott explained. “However, some less fashionable companies remain excellent opportunities.
“Balancing technology stocks as part of a diversified portfolio is [also] important to help reduce volatility.”
“Cost reduction and efficiency”
Secular trends driven by greater automation are likely to require a greater number of sensors and semiconductors than products in the past as systems become increasingly “connected, digitised, and electrified”, said Ben Fitchew, portfolio manager at Ardevora Asset Management.
“These secular trends are themselves driven by a move towards cost reduction and efficiency increases from automation,” he added.
The semiconductor industry, said Fitchew, saw significant growth between the 1980s to 2000, although analysts now appear to forecast a slowdown in end–user demand.
“Resulting from such dynamics, the industry has been undergoing a period of consolidation, leading to more capacity being controlled by fewer companies and capacity additions being streamlined,” the manager said.
“In other words, the industry structure is such that winners keep on winning.”
As the sector continues to benefit from ever-expanding uses of semiconductors, the fund manager said, they are also likely to change as manufacturers require smaller, faster and more power-efficient microchips.
“And the way to meet these demands requires increasingly complex and capital-intensive manufacturing methods,” he added.
“Why? Moore’s law [that observes the number of semiconductors in a microchip doubles every two years] is beginning to crumble, and the easy shrinkage of chips in the past, is hitting the limits of physics.”
Ardevora's Fitchew concluded: “Analysts and investors are anchored on a period between 2000-2015 when the rate of development and subsequent growth was slow. As such they underestimate the extent of opportunity that exists.”