Sectors vs industries explained
Investors group companies so that similar businesses can be compared. A sector is a broad group; an industry is a narrower group inside a sector.
The GICS system
The most widely used standard is the Global Industry Classification Standard (GICS), developed by MSCI and S&P Dow Jones Indices. It has four levels: sectors, industry groups, industries, and sub-industries. There are 11 sectors:
- Communication Services
- Consumer Discretionary
- Consumer Staples
- Energy
- Financials
- Health Care
- Industrials
- Information Technology
- Materials
- Real Estate
- Utilities
Other classification systems exist, and data providers sometimes use their own sector and industry names, so labels can differ between websites.
An example
Under GICS, a chip maker sits in the Information Technology sector and the semiconductors industry, while a software company sits in the same sector but a software industry. Both are “tech,” yet their businesses, costs, and typical valuations can be quite different.
Why the difference matters
- Fair comparisons. Margins, growth rates, and P/E ratios are most meaningful against companies in the same industry, not just the same sector.
- Reading market moves. Sector performance shows broad trends; industry performance shows which specific businesses are driving them.
- Diversification. Holding several companies in one industry is less diversified than it may look.
StockScroll’s Sectors and Industries tabs show performance groups when the live feed returns them. Use compare stocks side by side to line up companies from the same industry, and read how to research a stock for the full workflow.
Educational only. This article explains general concepts. It is not investment, tax, or legal advice and is not a recommendation to buy or sell any security. Check primary sources such as SEC.gov before making decisions.
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