“Failing to identify future technology today could mean missing out on the next big revolution,” Israel wrote in a customer note. “The pace at which themes are transforming businesses is blazing fast, but the adoption of many technologies — such as smartphones or renewable energy — has surpassed expert predictions for decades because we often think linearly, but progress is exponential.”
From the sixth-generation telecom network that could download the entire New York Public Library collection in 20 seconds to wireless electricity, things that could radically change people’s lives aren’t far in the future as you might imagine, according to strategists. led by Haim Israel, BofA’s head of global research on thematic investing.
Getting into the next big thing earlier has been crucial to one’s success in stock investing. Over the past three decades, only 1.5% of companies were responsible for all the wealth created in the global stock market, BofA said, citing a study by Hendrik Bessembinder, a professor at Arizona State University.
The company’s forecasts come amid a growing demand for thematic investing that focuses on understandable and recognizable stories. Led by the products of Cathie Wood’s Ark Investment Management, exchange-traded funds based on a market niche have attracted $42 billion in fresh money this year — more than total inflows for the whole of 2020, data collected by Bloomberg shows. intelligence.
Meanwhile, incumbents are being driven out at a faster rate due to accelerating innovations. Take, for example, the lifetime of S&P 500 companies. In 1958, the average company existed for 61 years. That has been shortened to 24 years in 2016 and is expected to halve to just 12 years by 2027, data from BofA shows.
Investing in early innovators often requires a strong stomach for losses, both in terms of bottom line and stock performance. A basket of unprofitable technology companies in innovative industries from Goldman Sachs Group Inc. collapsed almost 40% earlier this year and has yet to make up for half of the losses. And sure, not everyone will succeed.
For Israel from BofA, the reward of investing in the stars of tomorrow is not unimportant. According to his team’s estimate, the 14 technologies highlighted for the future currently represent only $330 billion in market size. Combined, they could increase by 36% per year to $6.4 trillion by 2030. For context, the profits of S&P 500 companies have historically grown at 6% per year.
“These moonshots could transform and disrupt multiple industries and contribute to the next great cycle of technology-driven growth,” the strategists wrote.
Below is a list of possible future technologies: 6G Telecom NetworksEmotional Artificial IntelligenceBrain Computer InterfacesBionic HumansImmortalitySynthetic BiologyWireless ElectricityHologramsMetaverseElectric Vertical Takeoff and Landing Flying CarsOceantechNext Generation BatteriesGreen MiningCarbon Capture and Storage