The speculative peaks reached in the share prices of the Technology, Media and Telecoms (TMT) stocks earlier this year now seem like a distant memory. The once sky-high valuations that allowed companies such as Baltimore Technologies and Psion Computer to attain market capitalisations that warranted promotion to the elite FTSE 100 have come down to earth with a bump.

This has been exemplified by the rapid demotion of most of these technology companies from the FTSE 100 a short three months after their elevation. However, it does seem that the sell-off in the TMT stocks reflects an adjustment to wildly optimistic share values rather than the beginning of a fundamental shift to a bear market in these shares.

Whilst stock market conditions continue to be volatile, there is every sign that the pace of technological change is continuing to drive business development.

Large-scale mergers and acquisitions continue to be a feature of the business landscape. Furthermore, many companies are continuing to invest heavily to generate organic growth and, indeed, it is the giants of the industry such as Intel and Microsoft that are leading the way.

Intel has recently announced the expansion of its plant in Leixlip, Co Kildare, involving capital investment of $2 billion (€2.1 billion). Intel has a market capitalisation of $457 billion - six times that of the entire Irish market - and is the world's leader in the production of semiconductors.

Demand for microchips is booming. Constantly increasing the processing speed of chips is the key driver of technological development.

However, just as important is the need to develop chips that can operate using a minimal amount of battery power. This is particularly important as the world moves on to the next generation of mobile telephony.

Increasing and enhancing the functionality of the mobile phone is generally regarded as the way forward and, with the number of mobile handsets soon set to exceed one billion, the potential is obvious.

However, as the next generation of mobile phones becomes the instruments that enable consumers to access the Web, send emails and trade in shares, they will have to be capable of performing many functions using tiny amounts of power.

Intel recently unveiled five new mobile processors as part of its drive to stay ahead in the race to develop low power computer chips. The stock market reacted well to this announcement and to the large Leixlip expansion driving up Intel's share price by over 8 per cent.

This large-scale investment in expansion and product development is being mirrored throughout the TMT sector. For example, Irish-based companies such as Baltimore and Iona Technologies continue to expand.

Although a number of technology initial public offerings have been withdrawn due to ongoing market volatility, many new issues have been successfully launched on to the stock markets. Valuations of many of these new issues have had to be revised downwards although some, such as Irish-based Parthus, have enjoyed a very healthy after market.

It is clear that confidence in the future prospects of their companies' remains at a high level among the leaders in the TMT sectors. While the share prices of these companies will always be volatile, their high growth prospects should eventually produce above average returns. Investors who are prepared to accept high risk and who are selective should continue to invest in TMT stocks given that the information technology revolution is likely to run for a long time.