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Technological Innovation

Pacome Breton | Alex Janiaud

Last updated on 3 November 2025


At a glance:

  • The technology sector houses some of the world's largest companies, which dominate financial markets
  • A long-term thematic approach to technology may suit investors who want exposure to growing areas such as artificial intelligence (AI), cybersecurity and robotics, while remaining diversified

Why is the technology sector so important to investors?

The technology sector is prominent in many investors' portfolios. Technology is especially visible throughout supply chains, through the use of robotics and automation, cloud computing, cybersecurity, and of course artificial intelligence.

At J.P. Morgan Personal Investing, our globally diversified portfolios have technology exposure at different levels, depending upon your chosen investment style and risk level. The style with the most exposure is our Technological innovation portfolio, part of our Thematic Investing offering that focusses on long-term technological trends. However, Thematic Investing is only available for investors at risk level 5 and above.

What are the key technology companies for investors?

The most obvious place to start is the so-called 'magnificent seven' – Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla – which at the time of writing dominate the US equity market.

While not all strictly technology businesses (with Alphabet and Tesla classified as Consumer Discretionary and Amazon and Meta as Communication Services), they are often grouped as such and together represent just over one-third of the S&P 500 index. They are all, or were recently all, in the top-10 of index constituents, at the time of writing. There’s no guarantee that these companies will remain in or around this ranking perpetually, however.

Source: S&P Global, September 2025. *Based on GICS Sector

As shown below, the magnificent seven have made up more than a fifth of the S&P 500 for several years now, showing how dominant these companies have become.

Magnificent 7 as a proportion of the S&P 500

Source: S&P Global, September 2025

How can investors best capture the success of technological innovation?

While some individual technology companies have performed exceptionally recently, investing in individual stocks still carries significant risk. One of the best ways to maximise your chances of capturing possible future success in the technology sector is through tracking an index via an ETF. This approach offers diversification across companies, sectors, and both long-established and newer technology trends. An emphasis on diversification remains key to avoid concentration in highly speculative technology that could be very volatile.

With all investing it is recommended to take a long-term view of at least five years. Technology can give us some of the best examples of how patience can pay off – Apple wasn’t in the top-20 US stocks in the S&P 500 when it first launched its iPhone in 2007, with a market capitalisation of less than £200 billion. By July 2023 it had become the first company to have a market capitalisation of $3 trillion.

What is our Technological Innovation investment theme?

The 'Technological Innovation' thematic theme is designed to provide exposure to advancements that drive or benefit from the evolution of technology, including robotics, artificial intelligence, and cloud computing.

By investing in this theme, J.P. Morgan Personal Investing customers gain exposure to the technological advances driving the modern world.

Our globally diversified portfolios hold technology stocks across multiple markets, for example semi-conductor suppliers TSMC in Asia and ASML in Europe. However, the US remains by far the largest and best-placed market to access this sector and its associated themes. The Nasdaq index has a particular focus on technology, and this is the market that we have a direct allocation to in our higher-risk portfolios.

In our Technological Innovation thematic portfolio range, we have exposure to long-term technology themes, which makes up between 10% and 20% of the overall portfolio, depending on the portfolio risk level chosen. Within this, we have identified a number of technology focus areas:

  • AI – The application of and investment in AI and machine learning is likely to accelerate across different elements of business and our lives over the years to come.
  • Cloud computing – Essential to the digital economy, cloud technologies enable businesses to grow, scale, innovate, and evolve.
  • Cybersecurity – This is in high demand now, and the market is set to increase in the years ahead as our technologies (and cyber criminals) become increasingly sophisticated.
  • Robotics and automation – Already essential on vehicle production lines, robotics is expanding into other areas of manufacturing as well as the service sector.
  • Semiconductors – These are the computer chips that store and process information. This sector is set to become more important in the decades ahead, particularly with the growth of AI which requires huge amounts of data.

We access these areas in a number of different ways. This includes sector-specific ETFs (such as VanEck Semiconductors and iShares Automation & Robotics), while we are also careful to avoid overlap by remaining as diversified as we can.

Given the vast reach of technology we are also keeping a close eye on how other industries can potentially benefit from radical shifts in innovation. For example, the energy sector is adapting rapidly to meet the data centre cooling needs of firms that use AI in a more efficient and sustainable way, while real estate firms are increasingly using technology for data centre construction and management.

Equity investors can today, with relative ease, access technology companies at the forefront of our increasingly digital global economy. We believe that long-term investing can both harness the scale and growth of established names, while also embracing ever-evolving sub-sector themes that can help tomorrow's winners realise their potential.

Risk warning

As with all investing, your capital is at risk. The value of your portfolio with J.P. Morgan Personal Investing can go down as well as up and you may get back less than you invest. Past performance and forecasts are not a reliable indicator of future performance. Thematic investing carries specific risks and is not for everyone. We do not provide investment advice in this update. Always do your own research.