In recent years, the technology industry has been a key factor in the rise of the stock market, with firms like Apple, Amazon, Facebook, and Google (Alphabet) growing to be some of the biggest and most valuable businesses in the world. The Global Industry Classification Standard (GICS) underwent modifications in 2021, which may cause some of these businesses to be reclassified as non-tech firms.
Several financial institutions and investors use the GICS system to categorize businesses by sectors and industrial groups when making investment choices. In order to create a more realistic depiction of the industry and its firms, the GICS modified how it categorizes businesses in the technology sector in September 2021.
Even though they are predominantly recognized as technology companies, businesses that get more than 5% of their income from other industries (such as financial services or healthcare) will be moved into those industries under the new categorization scheme. Companies like Amazon, which derives a sizable portion of its revenue from its cloud computing and advertising operations, and Facebook, which has a sizable user base, might possibly be impacted by this.
Although certain well-known corporations may no longer be categorized as technology companies as a result of the reclassification, it’s crucial to remember that the technology sector will continue to have a big impact on the stock market and the whole economy. Several creative businesses that are advancing technology and influencing how we live and work are still based in this industry.
Therefore, while some short-term disruption may result from the reclassification of some technological businesses, the ultimate goal is to create a more accurate and relevant categorization system that reflects the growing nature of the industry and its companies.