VGT: Technology Sector Headed For 'Lost Decade' Amid Falling Sales And Rising Costs

Summary

• Technology stocks were the top-performing sector over the past decade as immense innovation and low borrowing rates created trillion-dollar enterprises.
• Vanguard's Technology ETF VGT has underperformed in 2022 as many large firms face layoffs amid falling sales and rising input costs.
• Inflation is particularly troublesome for technology companies due to their dependence on imports and the impact of interest rates on growth stock valuations.
• Growing labor strain in key technology manufacturers, such as Foxconn, may dramatically lower the gross margins of many US technology firms over the coming years.
• VGT's price may not recover quickly as it appears unlikely most technology firms will return to a state of high earnings growth as the sector refocuses on long-term innovation.

Brandon Williams

Technology stocks have had a challenging year in 2022, falling around 29% compared to the S&P 500 at 19%. While many investors have been surprised by the sector's weak performance, technology was the leading segment in the years before 2022. Further, technology stocks have

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