We’re closing out 2016 with a roar. The markets are at or near all-time highs.
We saw massive rebounds from the energy, materials and financial sectors this year -- particularly following the presidential election in November.
That’s all fine and dandy. But for an investor/geek/everyday consumer like me, no sector piques my interest more than technology.
So as we approach 2017, I’m focusing on the top technology trends I’m watching for the year ahead.
Whether you fancy yourself a techie or not, I encourage you to follow along. Folks who act on these trends will have a profitable new year indeed.
Rise, Robots, Rise!
As I mentioned a few weeks back, I’m an avid sci-fi reader. I’m also a big believer in the potential of artificial intelligence (AI) technology.
So I’ll share this personal anecdote of why I think the sector will be on top of the heap in 2017.
I’m a subscriber to an emerging technology publication (no big surprise there). Recently, the publisher reached out with a note saying that its number of subscribers has doubled in the past three months.
Turns out the swell in readership was largely due to its coverage of AI and machine learning. The folks at the magazine seemed shocked.
I’m not.
Right now, the majority of my contacts in the tech sector are working in one of two areas: the Internet of Things (IoT) and AI.
AI is what has them the most excited. It’s what we spend nearly all of our time talking about.
We can’t deny it. This is our future.
Machine learning and AI are giving rise to autonomous agents. We’re talking about robots, autonomous vehicles (more on that below), virtual personal assistants and even smart investment advisors.
So it’s no surprise that the enterprise AI systems market is expected to grow from $358 million in 2016 to more than $31 billion by 2025.
Going Full Throttle
One of the biggest opportunities for AI is in transportation. Everyone knows self-driving cars are coming. It’s an inevitability.
But they’re coming a lot faster than most investors think. Here are just a few of the companies working to make autonomous vehicles a reality:
- Caterpillar (NYSE:CAT)
- BMW (DE:BMWG)
- Tesla Motors (NASDAQ:TSLA)
- Fiat Chrysler (NYSE:FCAM)
- Apple (NASDAQ:AAPL)
- Nissan (T:7201)
- Uber
An estimated 10 million autonomous and semi-autonomous cars are expected to hit the road globally by 2020.
You’re looking at an estimated five-year compound annual growth rate of 134%.
Many vehicles already have semi-autonomous features, like driver-assist systems and intelligent parking. So really, driverless cars aren’t some “futuristic technology”.
They already exist.
The biggest roadblock isn’t the technology itself. It’s that the technology is advancing faster than our own acceptance and regulations.
The investment opportunities here exist beyond car companies and blue chip tech stocks.
Mobileye (NYSE:MBLY) and Delphi Automotive (NYSE:DLPH) are collaborating on an off-the-shelf autonomous driving system. The product is set to debut at next month’s Consumer Electronics Show. They expect to release it commercially by 2019.
The Robot In Your Pocket
Now let’s return to the concept of virtual personal assistants (VPAs). This area is seeing big interest from the world’s top tech companies. You’re probably familiar with Apple’s Siri and Microsoft's (NASDAQ:MSFT) Cortana.
Amazon.com (NASDAQ:AMZN) has been working hard this holiday season to make its VPA, Alexa, a household name.
Facebook (NASDAQ:FB) is also hoping to dominate here. It wants to build the best AI lab in the world. Facebook Messenger’s “M” -- currently in testing -- has facial recognition software and can serve as a VPA.
But VPA technology doesn’t just have personal applications. It’s making headway in the corporate world as well.
By 2018, more than 3 million employees globally will have “robo-bosses.”
By 2020, 5% of all economic transactions will involve an autonomous software agent.
The fastest-growing companies will have fewer employees simply because of smart machines.
There’s even an AI-powered hedge fund, Numerai. It just received $6 million in its first round of funding.
Semiconductor companies like NVIDIA (NASDAQ:NVDA) are involved not only with the crafting of autonomous vehicles, but with the creation of all-autonomous agents. And NVIDIA is going full throttle here.
The company spent $2 billion to develop the Tesla P100 GPU. It runs 12 times faster than the company’s previous top-of-the-line chip. It will be used in data centers as well as the AI systems of self-driving cars.
Here’s the bigger picture.
In just the past two years, the number of companies NVIDIA works with in the AI and deep-learning space has increased 1,154%.
It’s grown from 1,549 firms in 2014 to 19,439 this year. The reality is that every industry has AI applications.
Every day, advances in technology are making greater innovations possible.
Interest in AI has been picking up over the past couple of years. But in 2017, it will shift into overdrive.
Good investing