Matt Stead
Some companies and technologies seem evergreen. It’s hard to imagine a company unseating Apple as the leader in mobile phone production, or another operating system replacing Microsoft’s as dominant on our computers. But then again, the same was thought about IBM’s position as the leader in personal computing until the 1990s. Intel was seen as the undisputed leader in PC chip making just a few short years ago. But that’s the thing with technology. It changes at such a rapid pace that we, and the companies in that space, can’t take anything for granted. The following are four areas currently experiencing rapid change that might remake the technology and investing landscape.
FOUR CURRENT TECH TRENDS AFFECTING INVESTMENT STRATEGIES
- ARTIFICIAL INTELLIGENCE AND MACHINE LEARNING
AI and machine learning models have already revolutionized how we all work. These models can analyze a staggering amount of data and can be trained to find patterns in that data that a human might not see. They can give us practically real-time insights into what’s happening in the current market and identify emerging trends and patterns that may affect everything from the market to the economy. On a smaller scale, AI tools can help us streamline administrative, communication and compliance tasks.
As for the future of the AI space? New emerging technologies might be industry disruptors or simply fizzle out. The sheer scope of the AI landscape makes it daunting to assess the short- or long-term potential of various assets. And there are a lot of unknowns around the next phase of AI. Which countries will be the biggest leaders and consumers of AI tech in the future? What problems is AI going to help solve? Will big-name computing giants like Microsoft and NVIDIA continue to grow, or be outpaced by newer upstarts?
- CLEAN ENERGY
American investors will spend an estimated $85 billion on renewable energy in 2024, up from $56 billion in 2019 (according to the International Energy Agency). Americans are expected to invest $89 billion in energy efficiency this year, nearly double what we invested five years ago. The IEA also projects that global investments in clean energy will double investments in fossil fuels this year.
The clean tech sector represents virtually limitless future growth on a global scale. From the purely financial perspective, tax credits and subsidies that incentivize clean energy projects may also motivate individuals and corporations to invest. This is sure to be a huge growth area for investors, and for the economy as a whole over the coming decades.
- DISTRIBUTED LEDGER TECHNOLOGY
The rise of cryptocurrency has introduced some investors to distributed ledger technologies (DLT) for the first time. It’s not new, but wasn’t widely understood until Bitcoin exploded. Blockchain is the most well-known example of DLT and is used to buy and sell cryptocurrency and other digital assets. Distributed ledgers are decentralized digital systems for recording transactions. Every computer connected to the same DLT platform (such as Bitcoin) stores a copy of the same ledger. Every computer’s ledger is updated when an asset is bought, transferred or sold through the platform.
It’s extremely difficult to commit fraud using DLT. Unlike hacking a bank’s system, cybercriminals would need to hack all the computers on the network in order to access private records. That’s why they’re increasingly popular systems among those who are highly sensitive about cybersecurity and data privacy. This tech trend is still young, so DLT investment opportunities are limited thus far. Exchange-traded funds that track the performance of Bitcoin are fairly new, but have recently been approved by the SEC after years of debate.
- CYBERSECURITY
We’ve all become increasingly aware that cybercrime constantly threatens our privacy, security and finances. Now, the global cybersecurity market is booming. Consumers, companies and governments are desperate for ways to protect themselves, making this another area seeing future potential.
Unfortunately, we’ve also seen the downside of cybersecurity firms getting too big. CrowdStrike’s recent software failure—which caused IT outages around the world that grounded flights and disrupted bank operations—damaged its credibility and brought attention to these firms having too much power and access to too many computer systems.
Nevertheless, the need for protection against bad actors will certainly mean continued growth in this area. The need will be to find balance between the security of our data and the vulnerability of an event like Crowdstrike disrupting our economy.
DON’T JUST WONDER ABOUT THE RIGHT INVESTMENT STRATEGIES FOR YOU—ASK US.
Sachetta’s investment management team constantly monitors the trends and market conditions that impact our clients’ portfolios. We pair our deep knowledge of investment strategy with our dedication to helping every client meet their specific financial goals. Contact us today!
Matthew J. Stead, MSFP, joined our team in 2014. He obtained a bachelor’s degree in finance at Bentley University and his master’s degree in financial planning (MSFP) at The University of Georgia. Matt wears a variety of hats in the office but primarily serves as our Chief Operating Officer, as well as building and maintaining our IT infrastructure.