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US tech shares soar, can ASX 200 tech shares follow?

The Nasdaq finished Monday in the green despite all other US indices failing to follow. 

This was largely driven by the surge in the Amazon.com share price after the company announced that it will begin allowing third-party sellers on its platform to resume shipping ‘nonessential’ items this week. In addition, it also announced that it was hiring an additional 75,000 employees to fill the mounting demand for Amazon services. Other Nasdaq heavyweights such as Microsoft, Apple, Alphabet and Netflix also finished green. 

What does this mean for ASX tech shares? 

Unfortunately, ASX tech shares are not of the same pedigree and do not necessarily provide the same services as US tech heavyweights. However, there are some technology companies that have been able to greatly benefit from increasing consumer activity in some categories.

As reported by the Sydney Morning Herald, a joint study by Australian credit bureau Illion and analytics firm Alphabeta has revealed which consumer categories have surged amidst the coronavirus pandemic. In terms of spending in early April, the data revealed: 

  • Alcohol and tobacco +33% 
  • Online retail and subscription services +61%
  • Food delivery +63% 
  • Home improvement +64% 
  • Online gambling up +67% 

Jumbo Interactive Ltd (ASX: JIN) and Pointsbet Holdings Ltd (ASX: PBH) are two technology-enabled businesses involved in gambling and entertainment services. 

Jumbo is an internet lottery business with its flagship product OzLotteries.com and mobile app. The company may face earnings tailwinds as it highlighted that 75% of all Australian lottery tickets were sold via retail channels and the expected impact that social restrictions will have on retail channels may benefit Jumbo’s digital revenue streams. 

The surge in online retail may benefit the likes of Afterpay Ltd (ASX: APT). Afterpay released a very upbeat and positive announcement today, highlighting its strong performance, pre-emptive adjustments to risk settings and strong balance sheet position. More specifically, the company highlighted that for the month of March, underlying sales across all markets were strong with average daily underlying sales up 12% on January and February. Its online sales in March represented 88% of total global underlying sales, demonstrating its significant exposure to the surging consumer category. 

Data centres and internet infrastructure has experienced an unprecedented spike in usage as a result of this new stay-at-home workstyle. This climate may suit the likes of NextDC Ltd (ASX: NXT) and Megaport Ltd (ASX: MP1), both of which provide on-demand services to support outsourced data centre infrastructure and cloud connectivity for enterprises of all sizes.

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Amazon. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of MEGAPORT FPO and Pointsbet Holdings Ltd. The Motley Fool Australia's parent company Motley Fool Holdings Inc. recommends Jumbo Interactive Limited and recommends the following options: short January 2022 $1940 calls on Amazon and long January 2022 $1920 calls on Amazon. The Motley Fool Australia owns shares of and has recommended Jumbo Interactive Limited. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Amazon, MEGAPORT FPO, and Pointsbet Holdings Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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