3 Tech Stocks to Watch for QE3 (Update)

This story was updated from June 4th to include new economic data and additional analyst comments regarding monetary easing.

NEW YORK (TheStreet) -- Tech stocks such as Apple (AAPL), IBM (IBM) and VMware (VMW) may benefit from the next round of quantitative easing from the Federal Reserve, speculated to be sometime in 2012.

The Federal Reserve did not announce another round of easing at its latest policy meeting, but there were slight changes to the statement which signal the Fed may indeed act. "The Committee will closely monitor incoming information on economic and financial developments and will provide additional accommodation as needed to promote a stronger economic recovery and sustained improvement in labor market conditions in a context of price stability," the FOMC wrote in a release.

Federal Reserve

Although the July jobs report showed 163,000 jobs were added during the month, the unemployment rate ticked up to 8.3%, which may be a signal for the Fed to act.

Morgan Stanley economist Vincent Reinhart had some thoughts on the recent Fed decision. He tweeted, "The news since June meeting was not enough to trigger action, implying a high hurdle for action. Language change matters." He also noted, "Fed paving the way for new rate guidance. Pay attention to Chairman Bernanke's Jackson Hole speech."

The U.S. dollar has continued to strengthen, particularly against the Euro, as U.S. economic data has remained weak, but the crisis in the Eurozone gets drastically worse. Technology companies such as Apple, IBM and VMware, which derive a significant portion of their revenue from overseas, may benefit from an additional round of easing because of their heavy exposure to international markets. Additionally, converting the companies' overseas earnings back into U.S. dollars would help earnings.

Technology as a sector, measured by the Technology SPDR ETF (XLK), cumulatively outperformed the Dow Jones Industrial Average and the S&P 500 during the previous two periods of quantitative easing. From Nov. 25, 2008 to March 31, 2010 (the time period for the first round of quantitative easing), the Technology SPDR ETF gained 65.6%, the Dow Jones gained 27.7%, and the S&P 500 gained 32.8%.

From Nov. 6, 2010 to June 30, 2011 (the time period for the second round of quantitative easing), the Technology SPDR ETF gained 0.8%, the Dow Jones gained 7.33%, and the S&P 500 gained 10.5%.

Reinhart did not predict the size of another round of easing, but several economists, including Bank of America's Michelle Meyer, have previously mentioned a package around $800 billion in purchases, comprised of mortgage-backed securities and U.S. Treasuries. During the first round of quantitative easing, the Fed bought $1.75 trillion worth of mortgage-backed securities, government-sponsored entity (Fannie Mae and Freddie Mac) debt and U.S. Treasuries. In the subsequent act, the Reserve purchased $600 billion worth of U.S. Treasuries. The Fed has also done two rounds of Operation Twist, in which the Federal Reserve buys longer-dated U.S. Treasuries while selling maturities at the front end of the curve.

Reinhart's comments come amid recent slowdown in economic growth, most notably the weak weak second quarter GDP report. The economy grew at just a 1.5% pace in the second-quarter. Recent employment reports have also been weak, with the economy adding just 87,000 jobs in May and an anemic 64,000 jobs in June.

Read on for more details on which tech companies could benefit from QE3, should the Fed act:

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