A tailwind for tech

With the Q1 earnings parade just starting this week, Wall Street will be listening for whatever financial guidance it can get from companies about the current quarter as well as the rest of the year. For tech vendors, there should be a strongly bullish tone in those comments. The reason? Their customers are ready to spend again.

In a just-completed survey by 451 Research's Voice of the Connected User Landscape (VoCUL), respondents indicated that their IT budgets for Q2 are the strongest they have been in six years. Specifically, our survey of more than 1,400 professionals involved in IT spending decisions showed that one in five (21%) plan to spend more in Q2 than they did in the opening quarter of 2017. That was half again as high as the 14% that said their current budgets have shrunk. In terms of where respondents said they have the most to spend, information security and enterprise applications topped the sector rankings, as they have for the four previous VoCUL quarterly surveys.

Taken together, the Q2 outlook marks only the third time in the past half-decade that the percentage of respondents with more money for IT spending has eclipsed those who said they had less money to put to work. And it appears that the momentum will extend beyond the current quarter, according to a separate question in the VoCUL survey. As they looked ahead to the second half of 2017, more respondents indicated bigger IT budgets than smaller budgets, compared with the first half of the year.

Of course, much of that fulsome forecast has already been priced into the stock prices of many of the tech companies that hope to satisfy the increasing demand voiced by the respondents to VoCUL's quarterly surveys. So far this year, for instance, the Nasdaq 100 Technology Sector Index is up about 13% – three times the return of broad-market indexes such as the Dow Jones Industrial Average and the S&P 500 Index.

For more real-time information on tech M&A, follow us on Twitter @451TechMnA.

Brenon Daly

Research Director, Financials

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