Forget IBM, Buy These Thematic Tech ETFs Instead

International Business Machines Corporation (IBM) witnessed year-over-year revenue decline for the 20th time in a row with its Q1 results. The company’s earnings per share came in at $2.38, beating the Zacks Consensus Estimate of $2.34.

Its revenues of $18.2 billion, however, fell short of $18.494 billion and declined 3% year over year. The company’s shares slid over 5% after hours, as per CNBC. IBM is up 2.5% so far this year (as of April 18, 2017).

So, what should investors do now? Should they take cues from IBM’s lackluster revenue numbers and get all disappointed about the broader tech sector or look out for tech ETFs that have the potential to outperform ahead. One thing is clear from IBM’s results –– the company has been transiting toward better growth areas “like cloud, analytics, mobility and security.”

In this vein, below we highlight a few thematic tech ETFs that could benefit investors over the long term.

ETFs in Focus

First Trust ISE Cloud Computing Index Fund (SKYY – Free Report)

IBM’s results only drive us to land on a cloud computing ETF. Amid subdued revenue performance, IBM registered a 33% year-over-year rise in cloud computing sales. This fund provides exposure to cloud computing securities by tracking the ISE Cloud Computing Index. Holding about 30 stocks, it is pretty well spread out across components with none holding more than 5.01% of assets. Software firms dominate this ETF, accounting for about 40% share. It has 0.60% in expense ratio and has gained 11% so far this year.

Global X FinTech ETF (FINX – Free Report)

Financial technology or “FinTech” is gaining immense popularity courtesy of increased usage of technology in financial transactions. Initially, FinTech was restricted to certain areas like payment processes. But it has now widened to include several other applications in the financial sector.

Mobile banking, mobile trading on commodities exchanges and digital wallets are examples of technological applications in the financial space, as per investopedia. IBM’s result also reinforces the rise of mobile practices (read: Fintech ETFs Head to Head: FINQ vs. FINX).