6 Tech Trends To Invest In
We take a look at six major trends in the technology world that investors should keep their eyes on.
The tech sector is experiencing a golden age with no end in sight. With the world more connected and advanced than it has ever been, thanks to technology, it is no surprise that the stocks of companies in this industry from the FAANG(Facebook, Amazon, Apple, Netflix, and Google) group to the BAT (Baidu, Alibaba, Tencent) trio are skyrocketing in value.
While individual tech stocks have experienced some turbulence over the course of the year – for example, Alphabet’s share price has dipped back below the US$1,000 mark after rising above that threshold in June – the tech sector on the whole has seen nothing short of stellar growth.
An indicator of the remarkable growth and success of the tech sector is the Technology Select Sector SPDR ETF (XLK), made up of the largest US tech companies including Apple, Microsoft, and Facebook. It has gained around 20.5% so far this year.
Further evidence of the sector’s dominance is the tech-heavy Nasdaq composite index, which has soared by around 20.7% this year – outperforming the S&P 500, which has risen about 12.5%.
But what lies in store for the future of the sector? What will be the next the game-changing innovations that revolutionise the way we live and turbo-charge stock markets?
As an investor, it might be daunting to try to understand where the growth areas are in the tech sector, and which companies to bet on. Here, we identify six tech trends that are dominating the news headlines, keeping the researchers and engineers busy, and piquing the interest of investors across the globe.
1. DATA ANALYTICS
Thanks to technology, data accumulation on a massive scale has become a breeze. But the true winners in this space will be organisations that learn how to make sense of that data, analyse it, and apply it to leverage its true business value. Companies that invest in mining data intelligently – be it through an in-house chief data officer or with the help of data analytics consultants – will be able to maximise productivity and profitability.
2. ARTIFICIAL INTELLIGENCE (AI)
Just a few years ago, words like Siri, Cortana, and Alexa did not exist in our everyday vocabulary. Today though, we wonder how we could have lived without these smartphone digital assistants that function using AI. Indeed, the proliferation of this technology is already broader than previously imagined – think facial recognition software, online chatbots, robot waiters, and even robo-advisors – and it is only set to grow as more uses are found for it.
3. VIRTUAL REALITY (VR) AND AUGMENTED REALITY (AR)
What is it like to be immersed in a different reality and possibly even interact with it? These are the capabilities offered by VR and AR. Obvious applications in the gaming and entertainment domains aside, other uses of these technologies include training and scenario planning in the corporate world and by governments. Recent studies have shown that these technologies can actually help develop empathy and lead to personality changes to inspire desired behaviour.
With VR and AR only at the starting point of their innovation curve, these technologies look set to take flight and become a significant source of revenue for the tech sector. Digi-Capital forecasts that the AR market alone will have more that one billion users and will generate US$60 billion in revenue by 2021.
4. AUTONOMOUS VEHICLES
Self-driving cars were once the stuff of sci-fi movies. Not any more. Today, the US, Sweden, China, and even Singapore are already testing their feasibility, running trials in the streets of their cities in actual autonomous vehicles. One of the biggest societal and environmental benefits of the proliferation of this technology is the reduction of passenger vehicles on the roads – which analysts believe will result in fewer traffic accidents and less congestion and pollution.
According to BI Intelligence, sales of drones in the US will hit US$12 billion by 2021, up from US$8 billion in 2016. The sectors that will utilise these flying machines include infrastructure, agriculture, transport, and security. Already, much has been written about drones delivering pizza to your doorstep, or helping to transport emergency medical supplies to disaster zones. Nicholas Smith, CEO and owner of GEO Owl, a company that analyses intelligence from US military and government drones, recommends keeping an eye on three sectors: commercial, military, and drone services.
Unless you have been living under a rock, you would have heard the words “bitcoin” and “blockchain” bantered about in the news. The former is a type of cryptocurrency that is recognised as the digital gold standard, while the latter is a record of cryptocurrency transactions (a vital component to the cryptocurrency system). This entire segment of tech is a decentralised digital cash system that is giving conventional currencies a run for their money. If the performance of bitcoin is anything to go by – as of end-September, its market capitalisation stood at almost US$70 billion – many analysts are predicting that digital currencies are here to stay.