What is 'Tech Street'

Tech Street is a term which refers to the technology sector, which divides into subcategories such as semiconductors, software, hardware, IT services and internet. Tech Street includes companies like Facebook, Google, Apple, IBM, Microsoft and Texas Instruments.

Breaking Down 'Tech Street'

Tech Street, as a term, is modeled on the metonymic uses of terms like Wall Street, Bay Street and Dalal Street for large stock exchanges. Whereas those refer to actual streets that house the headquarters of stock exchanges in the United States, Canada and India, respectively, Tech Street does not refer to an actual location.

Financial news organizations use the term Tech Street in headlines to speak metaphorically about movement in the technology sector.

Tech Street and the Rest of the Market

Tech Street is an crucial sector of the market. Tech Street companies render important services to consumers as well as businesses. Over the years, the range of products and services represented by Tech Street has drastically expanded. Today, the technology sector is a large and diverse grab bag of industries and includes cloud computing companies, television and home-appliance manufacturers, internet companies and hardware manufacturers.

Four big tech stocks are FANG, which consist of Facebook, Amazon, Netflix, and Google-parent Alphabet. Jim Cramer of "Mad Money" coined the acronym, and investors frequently compare the performance of FANG with market indexes. In 2017, FANG dwarfed market returns. Like the technology sector as a whole, the movement of FANG stocks largely determine the movement of the market. That is, when FANG goes up, the market goes up. When FANG goes down, the market goes down.

Tech Street Bubble

Because Tech Street stocks hold the promise of breakthroughs that will drastically improve efficiency or even create whole new business models, they trade at very high price-earnings ratios. That is, when investors buy tech stocks, they are not just paying for the value a company delivers in the present, but the value a company might deliver in the future, assuming a game-changing technological innovation comes along.

This enthusiasm for Tech Street gives those stocks an inordinately large market capitalization and therefore an outsize influence on market indexes and averages. As of July 1, 2018, just four tech stocks, namely Amazon, Microsoft, Netflix and Apple, were responsible for 84 percent of the S&P 500 Index’s year-to-date gains. This enthusiasm that pushes tech stocks up even as the rest of the market falls has some analysts calling it a bubble. A tech bubble could be particularly dangerous to the market as a whole, given how dependent it is on Tech Street.

RELATED TERMS
  1. FANG Stocks

    FANG is the acronym for four high-performing technology stocks: ...
  2. Wall Street

    Wall Street is a street in lower Manhattan that is the original ...
  3. Technology Sector

    The technology sector is a category of stocks relating to the ...
  4. FAANG Stocks

    FAANG is an acronym for the five most popular and best-performing ...
  5. Bay Street

    Bay Street in Toronto is Canada's financial center and is often ...
  6. FAAMG Stocks

    FAAMG is an abbreviation coined by Goldman Sachs for five of ...
Related Articles
  1. Investing

    FANGs Lose Favor As Fund Managers Bet Big on Tech

    Mutual fund managers are starting to rotate out of FANGs into less crowded tech stocks
  2. Insights

    Tech Stocks Could Drag Down the Market: Wells Fargo

    Double-edged sword: tech stocks exert growing influence on the movement of market indexes.
  3. Investing

    Tech Stocks May Be Both Cheap—and Risky

    The sector took a beating on Friday after the release of a BofA report.
  4. Trading

    Is It Time To Sell Technology Stocks? (LNKD, AAPL)

    Technology stocks have taken a drubbing in recent days. Is it time to sell them?
  5. Investing

    'Occupy Silicon Valley' Trend Could Hurt Tech Stocks

    'Cash rich and tax light' tech giants will fall from their 'bubble peaks,' one bear suggests.
  6. Investing

    Why Tech Stocks Will Surge Again

    Tech magic: earnings and revenue growth may push up stocks longterm, analysts say
  7. Investing

    Are Tech Startups Overvalued?

    Tech companies with billion dollar valuations are mushrooming and the NASDAQ index passed 5,000. Is there an app to tell us if we are in a tech bubble?
  8. Investing

    TMT Case Study: Comparing the Market to the FANGs (FB, GOOGL)

    The FANGs, have surged past the broader market in recent years, becoming much more than what they started their lives as: a photo-sharing site, an online bookstore, a DVD mailing service and ...
  9. Investing

    Fund Managers Dropping, Cutting Positions in Facebook

    Facebook's data scandal is prompting some fund managers to unload their positions in the social media giant.
  10. Investing

    The Bullish Case For Tech Stocks: Goldman

    Goldman projects robust 19% earnings growth for the tech sector in 2018.
RELATED FAQS
  1. Where does the name "Wall Street" come from?

    Learn the history "Wall Street," a name now synonymous with the US financial markets. Read Answer >>
  2. What lessons did the tech bubble crash give to investors in the Internet sector?

    Learn how investors contributed to the dot-com bust and how Internet services and investing has changed since the market ... Read Answer >>
  3. When does Q4 start and finish?

    Learn about different financial years used by various companies. Explore when the fourth quarter begins on October 1st and ... Read Answer >>
  4. What is the average price-to-earnings ratio in the internet sector?

    Learn what the average price-to-earnings (P/E) ratio is for companies in the internet sector and how the sector is broken ... Read Answer >>
  5. Who are Microsoft's (MSFT) main competitors?

    Are you investing in Microsoft? Learn the main competitors of technology giant Microsoft and the stiff competition facing ... Read Answer >>
Trading Center