InfoTech Sector Outlook - Key Insights

This report provides a comprehensive analysis of the Information Technology sector outlook, covering sector size, performance, top companies, business analysis, and growth trajectory. Key takeaways include significant industry growth and the impact of emerging technologies on revenue. Stay informed to gauge economic growth and competitiveness.

• InfoTech
• Sector Outlook
• Technology
• Growth Trajectory
• Business Analysis

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1. INFO TECH SECTOR OUTLOOK Sean McDowell | Abby Marks | Tony Kajfasz Ryan McCuen | Tori Magers | Meghdeep Mukherjee | Connor Koehnke

2. AGENDA

3. SECTOR OVERVIEW

4. SECTOR SIZE & WEIGHT Category Market Cap Market Weight Industries in Sector Result $9.95T 26.21% 6 Total Constituents 71 https://eresearch.fidelity.com

5. SECTOR PERFORMANCE https://eresearch.fidelity.com

6. https://www.tradingview.com/symbols/SP- S5INFT/components/ SECTOR 10 LARGEST Top 10 companies comprise 68.5% of weighting

7. https://www.tradingview.com/symbols/SP- S5INFT/components/ SECTOR PERFORMANCE

8. https://novelinvestor.com/sector-performance/ SECTOR https://novelinvestor.com/sector-performance/ PERFORMANCE InfoTech

9. BUSINESS ANALYSIS

10. SECTOR BUSINESS CYCLE Sourced from: Fidelity Investments

11. SECTOR BUSINESS CYCLE Sourced from: Fidelity Investments

12. SECTOR BUSINESS CYCLE Sourced from: Fidelity Investments

13. Tracking the digital economys growth trajectory is essential because it serves as an integral forward-looking barometer of U.S. economic growth and international competitiveness - Brookings Institute Major Focal Points Moving Forward Trends and Takeaways The info tech industry grew from an annual value-add of $835 billion in 08 to $1,480 billion in 17 (77% increase) Global competition in key areas can heavily impact supply and demand as well as profitability 46% of new revenue growth in the tech sector is attributed to emerging technologies categories from 2018-2023

14. NDR Sector Highlights Key Takeaways: Best performing sector year- to-date and S&P 500 Technology is up over 12% Technology s strong balance sheet makes it a rare cyclical safe-haven. High Cash, Low Debt. Key Indicator: Watch Software spending trends. Q1 GDP showed software capex growth slowed, but it remained above 7%. Key Driver: Strong Balance Sheet Only 10% of S&P 500 Technology s constituents have interest coverages ratios below 4, the lowest among all sectors. The sector s largest companies, Apple & Microsoft (40% of sector market cap), have abundant cash reserves, & have outperformed by over 2800 and 3100 basis points YTD SECTOR Abby or potentially HIDE BUSINESS CYCLE Negatives: June is the weakest month for sector seasonality, Bipartisan support to break up big-tech companies, US tension with China rising Positives: Outperforms in periods of falling volatility, Q2 earnings revision ratio of -.20 is highest among all sectors, highest sector model score (for NDR) Sourced from: Ned Davis Research

15. Substitutes: Low Info Tech currently doesn t have a substitute Buyer: Medium - High Low switching cost Variety of choices for buyer Incentive backed purchases Price is a driving factor Supplier: Medium Strong supplier relationships: long- term & collaborative Standard Specs for most products New suppliers difficulty entering PORTER S 5 FORCES New Entrants: Low Economies of scale held by existing firms High capital requirement Established brand recognition Rivalry: High Stiff competition amongst existing companies Strong brands have loyal and large customer base Uneven market share

16. Negatives: Disrupting raw material supply chain Disrupting electronics value chain Inflationary risk on products INFOTECH IN COVID-19 Positives: Rapid move to and emphasis on working from home Increased need in software, teleconferencing, social media, etc. Focus on de-risking the end-to-end value chain Renewed focus on sustainability practices. https://www2.deloitte.com/global/en/pages/about-deloitte/articles/covid- 19/understanding-covid-19-s-impact-on-the-technology-sector-.html

17. E-commerce Quick Facts According to a study done by Adobe, Total online spending in May hit $82.5 billion, up 77% year over year Memorial Day sales grew 75% compared to last year Mobile e-commerce grew 10% since January In May, Connecticut saw a 99% growth in e- commerce Covid-19 Impact, Continued

18. SECTOR VS. REIT

19. ECONOMIC ANALYSIS

20. SECTOR PERFORMANCE VS. S&P 500 Source: Fidelity

21. SECTOR VS. US GDP Source: Information Technology Presentation

22. Source: NetAdvantage SECTOR VS. SEMICONDUCTORS Source: Information Technology Presentation

23. FINANCIAL ANALYSIS

24. Sales Growth and R&D Communications Equipment - Cisco, Motorola Electronic Equipment - CDW IT Services - Accenture, Fiserv, Paypal, Visa Semiconductor - Intel, Nvidia Software - Microsoft, Adobe, Oracle, Salesforce Hardware, Storage & Peripherals - Apple, HP, Xerox Source: NetAdvantage

25. Gross Margin % and Net Income % Communications Equipment - Cisco, Motorola Electronic Equipment - CDW IT Services - Accenture, Fiserv, Paypal, Visa Semiconductor - Intel, Nvidia Software - Microsoft, Adobe, Oracle, Salesforce Hardware, Storage & Peripherals - Apple, HP, Xerox Source: NetAdvantage

26. Sector Levered Cash increased 55% from 2015- 2019. S&P 23% Sector Dividend Per Share Increased 84% from 2015-2019. S&P 35% Levered Cash Flow Sector EPS increased 73% from 2015-2019. S&P 57% Source: NetAdvantage

27. SECTOR ST LIQUIDITY + LT SOLVENCY Source: NetAdvantage

28. VALUATION ANALYSIS

29. Absolute Basis High Low Median Current 28.8 12.5 18.9 26.4 P/E 8.1 2.8 4.5 8.1 P/B 5.3 1.9 3.2 5.2 P/S 18.3 7.9 12.1 16.9 P/EBITDA SECTOR VALUATION Relative to SP500 High Low Median Current 1.3 0.9 1.0 1.3 P/E 2.4 1.3 1.6 2.4 P/B 2.3 1.5 1.8 2.3 P/S 1.8 1.1 1.3 1.5 P/EBITDA

30. Software Industry: $3.61T Market Cap SECTOR VALUATION

31. SECTOR VALUATION

32. SECTOR VALUATION

33. RECOMMENDATION

34. SECTOR S&P Weight SIM WEIGHT +/- Info Tech 26.21% 25.68% (0.53%) RECOMMENDATION Match the S&P weight (+.53) and pull from overweight sectors of communications and financials. Further recommend industries within our sector with low debt and high cash balance sheets in this time of uncertainty, best equipped to weather the storm.

35. QUESTIONS???