The ubiquitousness of technology is becoming more apparent as the global population embraces everything digital. The technology space is rife with continuous evolution of new trends and ideas. Per Gartner, Artificial Intelligence (AI), Intelligent Apps & Things, Virtual & Augmented Reality, Blockchain are some of the hot technology trends to look for in 2017.

Artificial Intelligence (AI) techniques like machine learning, deep learning and natural language processing (NLP) are rapidly changing our digital lives. Per an IDC report, worldwide spending on artificial intelligence and cognitive systems is estimated at over $47 billion by 2020, which is currently growing at a CAGR of 55.1%.

The massive demand for analysing unstructured data, development of advanced algorithms and availability of powerful Graphic Processor Units (GPUs) for faster and cheaper parallel processing are primarily responsible for this growth.

Increasing usage of AI techniques are aiding in the development of intelligent applications & things. Apple’s Siri, Microsoft’s Cortana, Amazon’s Alexa virtual personal assistants, IBM’s Watson, and Google-DeepMind’s AlphaGo program are some prime examples of the AI technique usage.

Meanwhile, Virtual Reality (VR) along with Augmented Reality (AR) has been touted as the next “happening” computing platform with massive growth potential. Per IDC’s Worldwide Semiannual Augmented and Virtual Reality Spending Guide, worldwide revenues will grow at a CAGR of 181.3% (over the 2015–2020 period) reaching more than $162 billion by 2020.

Similarly, Blockchain technology has gained significant acceptability among financial providers due to its speed and security. Blockchain is much faster than legacy technologies in completing a transaction as there is no need for manual processing or authentication by intermediaries.

Zacks Industry Rank

The continuous evolution of so many trends & ideas make the Computer and Technology sector a complex maze of different industries. Consequently, finding the top-performing ones among them is not an easy task. Hence, we have used the Zacks Industry Rank to make this task fairly simple.

A top Zacks Industry Rank signifies that more stocks within that group are likely to see upward earnings estimate revisions, implying a bullish outlook for that industry. Historically, we have found that the top 50% of Zacks-Ranked Industries outperform the bottom 50% by a factor of more than 2 to 1.

The Zacks Industry classification divides the business world into 16 sectors comprising 60 medium or M-level industries and 260 plus or X-level industries. We rank all 260 plus X-level industries based on the earnings outlook for the constituent companies in each industry.

Top-Ranked Computer and Technology Industries

Fiber Optics industry – currently ranked #4 (within top 2%) out of the 265 industries ranked by Zacks – is the top-ranked industry in the Computer and Technology sector. The industry is well poised to grow rapidly due to growing demand for high-speed internet services.

Fiber Optic cables are increasingly replacing metal wires due to its efficiency and high transmission capacity. Per MarketsAndMarkets, Fiber Optics market will be worth $3 billion by 2019.

Notably, the industry’s return of 48.70% is much better than the S&P 500 Composite’s gain of 9.97% on a year-to-date basis.
 

Industrial Automation and Robotics with rank #52 (within top 20%) is another top-ranked industry in the sector. Growing demand for industrial robots and efforts to reduce the human element in several processes to prevent accidents, improve operational efficiency and establish a certain quality of output are the key catalysts.

According to a latest report from Transparency Research, the global market for industrial automation will grow to beyond $350 billion by 2024.

Notably, the industry’s return of 31.54% is also better than the S&P 500 Composite’s gain of 9.97% on a year-to-date basis.
 

Key Stock Picks

Given the strong growth forecast for both the industries, it will be good idea for investors to pick stocks from them for a winning portfolio. Here are three stocks which sport either a Zacks Rank #1 (Strong Buy) or #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Headquartered in Sunnyvale, CA, Finisar Corporation provides optical subsystems and components for data communication and telecommunication applications globally. The stock sports a Zacks Rank #1 and has VGM Score of ‘A.’ In the last 30 days, the company’s full year estimates went up 1.4%.
 

San Jose, CA-based Oclaro Inc. is a leading provider of high performance optical components, modules and subsystems to the telecommunications market, and is one of the largest providers to metro and long haul network applications. The stock has a Zacks Rank #2. In the last 30 days, the company’s full year estimates went up 4.1%.
 

Yamanashi Prefecture, Japan-based Fanuc Corporation (FANUY Quick QuoteFANUY - Free Report) is engaged in the development, manufacture, sale and maintenance of robots and factory automation products primarily in Japan, the U.S., Europe and other Asian countries. The stock has a Zacks Rank #2. In the last 30 days, the company’s full year estimates remained steady at 52 cents.
 

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