Information Technology revolves around three engines that compound into the digital economy: Semiconductors & Semiconductor Equipment, Software & Services, and Technology Hardware & Equipment. This hub focuses on the KPIs that actually move value in each subsector, how to value them with discipline, and a curated path through research posts so you can build intuition fast and translate it into a model.
Start with the Introduction in this page to each subsection (GICS 45), then dive into each of them through the provided links below:
Placeholder for GICS 45
Deep Dives by Subsector
Semiconductors & Semiconductor Equipment
Everything starts at the wafer. Track wafer capacity and utilization, node mix (leading-edge vs lagging), ASP trajectory, inventory days, and capex/WFE cycle. For equipment names, anchor on foundry capex share, order growth, book-to-bill, and installed-base service revenue. Valuation typically toggles between mid-cycle EPS and cycle-normal EV/EBITDA/EV/Sales, with a sanity check on through-cycle FCF. Pair this with your AI build-out notes to separate structural from cyclical.
Software (Infrastructure & Application)
The flywheel is recurring revenue quality. Focus on ARR/NRR (gross and net retention), gross margin by product, S&M efficiency (CAC payback, LTV/CAC), and rule-of-40—all reconciled to GAAP cash generation after SBC. For mature platforms, re-rating hinges on expansion into adjacent SKUs and price realization. Valuation: EV/Revenue vs growth/FCF profile, or EV/FCF for cash-rich names, cross-checked against durability of NRR.
IT Services & Consulting
Cycles here are about bookings/TCV, utilization and bill rates, pyramid mix, and exposure to discretionary projects. Watch offshore mix and wage inflation versus pricing power. Valuation gravitates to EV/EBITDA and FCF yield, tempered by recession beta and client concentration.
Technology Hardware, Storage & Peripherals
Units and mix drive the P&L. Monitor replacement cycles, ASPs, channel inventory, component cost curves, and services/attach rates. For storage and peripherals, layer in enterprise vs consumer mix, cost/bit, and price-cost timing. Valuation: mid-cycle EPS/EVEBITDA, with balance-sheet checks on working capital velocity.
Communications Equipment & Networking
Orders lead revenue. Track book-to-bill, backlog burn, product mix shift to software/SaaS attach, and service margin. Hyperscaler and telco capex plans are your external demand curve. Valuation skews to EV/EBITDA with a premium for recurring software.
Electronic Equipment, Instruments & Components (Test & Measurement)
This is the picks-and-shovels layer for compute. Key KPIs are order growth, segment gross margins, recurring software/services, and backlog duration. Cash conversion is usually strong; value it on EV/EBITDA and FCF yield, adjusting for cyclicality in semi/comm test exposure.
IT Distribution & Channels
Thin-margin throughput businesses where working-capital turns, vendor rebates, and mix into higher-margin services determine ROIC. Value on P/E and FCF yield, with careful reading of cash seasonality.
IT Security (if you maintain a dedicated tag)
Treat as software with security-specific KPIs: ARR/NRR by module, land-and-expand seat growth, platform consolidation wins, and gross margin after cloud delivery costs. Valuation: EV/Revenue vs growth/FCF with a consolidation optionality premium.
See other sectors: Health care · Financials · Energy