Technology stock enjoys strong start to 2012

Many major technology companies have seen their share prices rise over the last few days. However, an analyst has warned that the year is set to be a volatile one for firms of all sizes.

Amazon, Microsoft and AMD started the year with share prices higher than they had been at the close of 2011.

Amazon grew more than 3.4 per cent, Microsoft 3.1 per cent, while chip manufacturer AMD's stock grew by 2.7 per cent.

Anthony Miller, managing partner at analyst firm TechMarketView, explained that the technology market at the beginning of the year is extremely susceptible to both good or bad news.

"A huge amount of what goes on is purely sentiment-driven – that's part of what we're seeing. There has been positive news in terms of US manufacturing performance, as well as employment figures in Germany," said Miller.

"The markets – now more than ever – are tremendously sensitive to good and bad news on world economies. Any spark of good news in the US tends to push up US stocks, and Europe tends to follow. Similarly, good news in Europe brings up European stocks."

Miller argued that the share prices of technology companies are closely tied to the performance of other market sectors, as non-technology companies that perform well are likely to ramp up their IT spending.

He went on to explain that overall market fortunes in 2012 are likely to be mixed.

"Most heads of government, including David Cameron, are pitching pessimistic stories of the current economic climate. That may well lead to any good news being amplified as investors look for well performing stock," he said.

"However, there are going to be a lot of disaster stories in 2012, just as we saw in 2011. That will be reflected in share prices."