NEW YORK (CNNMoney.com) -- The technology sector is arguably the healthiest in the economy right now. But here's a sobering thought: Most major tech stocks are probably never going to get back to the levels they were at a decade ago.
Even if they do ultimately top where they were at the height of the dot-com bubble, it's going to take years.
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| Apple and Research in Motion have thrived during a brutal ten years for tech stocks. |
Microsoft (MSFT, Fortune 500) and Oracle (ORCL, Fortune 500) are still about 30% lower than where they were trading on March 10, 2000, the day the Nasdaq hit its all-time high. They've held up better than many others.
Cisco Systems (CSCO, Fortune 500) and Intel (INTC, Fortune 500) each trade more than 60% below their March 2000 prices, while Texas Instruments (TXN, Fortune 500) is down about 70%.
Yahoo (YHOO, Fortune 500) and Motorola (MOT, Fortune 500) are down 80% and 85%, respectively.
Still, it hasn't been a Lost Decade for all techs.
Apple (AAPL, Fortune 500) has skyrocketed more than 650% in the past 10 years for obvious reasons. Smartphone rival Research in Motion (RIMM) has gained more than 200% with the success of the BlackBerry.
Considering that they have both supplanted Motorola as a leader in the cell phone business, their gains are not a big surprise.
"You want to own techs with increasing market momentum. Companies gaining share and stealing share from competitors are the ones to buy," said Peter Misek, chief technology strategist with Canaccord Adams in Toronto.
Leaders in the gaming industry also did well during the past 10 years, as shares of software developer Activision Blizzard (ATVI), graphics chip manufacturer Nvidia (NVDA) and Wii maker Nintendo (NTDOY) are all higher now than where they were in March 2000.
Being a market leader in a relatively recession-proof business helps as well.
With the number of viruses, spam and other computer headaches continuing to explode, that meant big business for the two top security software companies. Shares of Symantec (SYMC, Fortune 500) and McAfee (MFE) both bucked the tech bear and are higher now than they were 10 years ago.
Creating a market and then dominating it also can lead to success. eBay (EBAY, Fortune 500), still pretty much the only game in town for online auctions, has also recovered all the ground lost in the tech swoon and is now trading above its March 2000 levels.
"If there's a lesson to be learned, it's that product leadership is always great. There is something to be said about the power of being big and innovative," said Peter Wood, a technology analyst at Chase Investment Counsel.
But there are smaller, lesser-known techs that also enjoyed healthy returns. Several of them make equipment for the military, such as Flir Systems (FLIR), CACI International (CACI) and Harris (HRS, Fortune 500).
These companies wound up posting strong sales and earnings growth in light of increased government spending on defense due to the wars in Iraq and Afghanistan as well as higher levels of security in the U.S. because of terrorism fears.
Still, while it's worthwhile to look at what did well in the past 10 years to try and identify helpful trends, these companies may not necessarily be the tech winners for the next decade. So which companies and sectors look attractive now?
Wood said that companies like EMC (EMC, Fortune 500) and NetApp (NTAP) should benefit from the ever-increasing need of big businesses to store more data. Misek also said that companies catering to large corporate customers, not average consumers, should probably perform well since there is more pent-up demand by businesses to upgrade following the recession.
But Misek added that the worst thing for an investor to do is to just make a blanket bet on tech. stock picking still matters. He thinks that should be particularly good news for Cisco, IBM (IBM, Fortune 500) and Hewlett-Packard (HPQ, Fortune 500).
Misek said the biggest mistake from the dot-com bubble was that investors thought anything remotely related to the tech sector could do well forever. People weren't really wrong about the potential of the Internet though.
"When you look back at the predictions of 10 years ago about how the Internet would change our lives, people weren't that far off. They were wrong about the number of winners," he said. "If you owned an index, you'd still be under water. But if you owned Apple, RIM and Amazon, you'd be doing just fine."
-- The opinions expressed in this commentary are solely those of Paul R. La Monica. 
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