Top Investment Sectors for 2021
2020 was a wild ride for investments across virtually every category. The markets saw oil prices drop below zero, a craze in SPACs displacing IPOs, and a volatile stock market seeing price swings from multi-year lows to multi-year highs in a span of months. However, in 2020, the Nasdaq, a primarily tech-based index, finished up 43.6 percent whereas the Dow Jones and S&P 500 only finished up 16 and 7.25 percent respectively. It seems that while the stock market as a whole has been subject to higher highs and lower lows, tech has established itself as a steady and winning investment. 2021 is continuing the trend of intense tech investment. We’ve already seen Bitcoin (Blockchain) go up 79 percent is less than 3 months to surpass the $50,000 mark. Broader tech indices shot to record highs and continue to see massive volatility. Now more than ever, the tech sector of the stock market has proven to be a money maker for savvy investors. The biggest question on the minds of many companies and investors is where tech investment makes the most sense.
In this article, we will cover 4 tech investment categories that you should be taking a closer look at. In order to pick these categories, we evaluated many companies and tech sectors to see which ones satisfy multiple criteria.
Popularity:
- Are there many businesses in this category in order to sustain growth and innovation?
- Is the consumer market of this category diverse and can it be used worldwide?
- Is the current demand for the products or services of these companies high and continuing to grow? Did COVID-19 increase the demand or has the initial investment since rebounded?
Familiarity:
- Can all ages and groups understand the technology, and is the learning curve of the technology produced simple?
- Will people or businesses need or want to use it on a daily basis?
Growth:
- Have the companies and subsequent stock prices/earnings grown in the past 1, 2, or 5 years?
- Did COVID-19 allow the company to innovate and adapt better?
- Is the growth of this industry consistent throughout the past few years?
Potential:
- Will the need or demand for this product or service maintain the levels it is currently at in the next ten to twenty years?
- Will these products or services innovate or change for the better in the coming years?
- Are the products or services unique and cannot be easily replaced or modified by another industry?
Autonomous Vehicles
Currently, there are no fully autonomous vehicles on the market for consumer use; instead, there are partially autonomous vehicles that range from level 0 (fully manual) to level 5 (fully autonomous). The market this category is covering is cars ranging from level 2 through 4 in which a passenger must be in the car in order for the car to travel and the car is subject to geofencing (a car that uses software to perform pre-programmed actions based on locations, movements, and boundaries). Level 5 autonomous vehicles drive on command with or without a passenger and can go wherever the car wants. Each of these autonomous vehicles combines technology such as sensors, machine learning, programmed algorithms, processors, and actuators.
Because of the many technology and law requirements, each of these vehicles is subject to, breaking into the industry as a start-up has been extremely difficult. However, with the rise of new machine learning techniques and more advanced sensors, the autonomous vehicles category has been a fast-growing industry that has seen many new companies, products, and earnings increase in the past few years. Furthermore, this increase in popularity and growth is not specific to the United States as many countries in Europe and Asia are looking to utilize autonomous vehicles in the near future. The companies that seem to be growing quickly and fueling the progression of autonomous vehicles are Waymo (partnered with Fiat Chrysler and Volvo) and Cruise (partnered with GM), but many other players like Argo AI (partnered with Ford and Volkswagen) and Zoox (partnered with Amazon) are pushing ahead as well.
Investors looking at the autonomous market should note two important points. First, autonomous trucks very well might beat autonomous passenger cars to market profitability due to their use cases and economics. Companies like Aurora and TuSimple are leaders in the autonomous trucking space. Second, the autonomous vehicle ecosystem is much larger than just the vehicles themselves. Companies making everything from sensors to occupant monitoring systems and machine learning compute stacks are worth keeping an eye on as well. Additionally, autonomous vehicles will largely be battery electric vehicles, so an investment in electric vehicle components and manufacturing will pay dividends in autonomous vehicle market penetration as well. All things considered, given the growing volume of deliveries for online shopping and the constant need to transport agriculture, raw materials, and people, the future of the autonomous vehicle industry is worth the investment today.
Communication (Business, Educational, XR/VR)
When employees across all industries were sent home to work remotely a year ago, many employees envisioned returning to the office as soon as it was possible (given that it was safe). Now, the subtle improvements to many communication and e-learning platforms along with the ability to work in comfortable attire, without a commute, and from wherever you want has convinced many employees to continue working remotely for the foreseeable future. Not only does remote working have numerous benefits for employees, but businesses as a whole can save money on electricity and other office expenses which further cuts down their carbon footprint. As a result, many businesses, such as Facebook and Amazon, are pledging to let many of their employees remain remote, creating a future where remote work may go hand in hand with traditional in-office working.
In this likely near future, many employees would use and need access to platforms that allow them to communicate, train, and learn new content. The rise of team communication tools like Slack began before COVID, but the trend of increased spending in the communication & collaboration space instead of on traditional office and travel expenses is still on the rise. This trend points to continued investment interest in companies such as Microsoft (Teams/Outlook), Zoom, and Slack. And with the new surge in virtual reality interest and low-cost headsets, new tools from Oculus and Pico VR are likely to see increased traction in the corporate market for collaboration, training, and education.
Each of the communication companies above allows for instant communication and connection between remote employees making it a worthy technology investment. Oculus and Pico are companies that produce some of the best virtual reality headsets allowing remote employees to join virtual meetings that allow them to better interact with coworkers. Additionally, these headsets allow employers to train and onboard new employees with more vivid and risk-free situations. Because of the dual capabilities of these companies (communication and training), this is a piece of technology that will be heavily used in the future and thus, a tech investment you should be looking at. With current workplace trends continuing through 2021, we expect growth potential in the communication & collaboration market remain consistent with other booming tech categories like AI and Health Tech.
Artificial Intelligence (Within the Business and Healthcare Field)
Artificial Intelligence is a broad term and within the business and healthcare fields it is where a computer processes vast amounts of data and metadata, then recognize patterns and generates models for decision making or new content generation on its own. While this type of software is prevalent in many offices and industries, it is heavily used within our first recommend investment category, autonomous vehicles. For example, the many sensors on each autonomous vehicle will pick up data, which the artificial intelligence software processes using machine learning algorithms to make decisions around when to switch lanes, stop, or speed up.
Additionally, artificial intelligence is used increasingly heavily within the sales and media industries. With approximately 400,000 Amazon Orders a day, 164 million hours spent on Netflix each day, and 286 million active users each quarter on Spotify, artificial intelligence is needed and used within each of these companies to process the large amounts of data. Using advanced deep learning algorithms, this software can predict products, movies, and songs that will best interest and engage users, which in turn allows each company to generate more engagement and revenue.
Within the medical industry, artificial intelligence can scan vast amounts of MRIs and X-Rays (much more than a typical doctor can do in a day) and flag each X-Ray with the proposed injury and treatment options. Furthermore, with machine learning algorithms, this software can quickly recognize patterns within past X-Rays and generate improved treatments and probabilities of patient outcomes. For example, DLAD (Deep Learning Based Automatic Detection) analyzed many chest radiographs in order to recognize and learn patterns of uneven cell growth and connect that to the probability of it being cancer. Ultimately, DLAD outperformed 17 out of 18 doctors that analyzed the same radiographs. With a shortage of physicians and surgeons throughout the world and an increased focus on viruses and subsequent outbreaks, the ability to utilize artificial intelligence to analyze patient data and project solutions and probabilities can not only save time, but also provide many social and economic benefits to developed and developing companies.
With all this in mind, it is no surprise that the earnings and demand for artificial intelligence companies has grown considerably over the past few years and makes for an interesting investment target. But as with autonomous vehicles, the artificial intelligence space is a combination of technologies and sub-industries ranging from computing hardware to model development and deployment, all of which are seeing upticks in investment interest.
Healthcare Technology
Healthcare Technology is a very broad field of products and services. The specific category we will be looking at is the application of health monitoring technologies and the use of many different technologies within medical facilities.
Let’s start with one of the most global health problems. According to the CDC, in the United States there is a heart attack every 40 seconds and over 1 in 10 people have diabetes. With such a large market of people within the United States (and growing each day) that suffer from each of these conditions, there is a large market and demand for services to help monitor and manage public health, especially for chronic conditions.
Today, companies are producing smartwatches that are being created with artificial intelligence software that has the ability to recognize heart attacks and send electrical impulses to the heart. For people with diabetes, future smartwatches will consist of the ability to continuously monitor glucose levels and measure sugar levels in real-time. This allows users to better schedule and live their day as they can prevent intermittent glucose testing and shots. With such a large problem within society today (not only in the United States but in all countries) the market for consumers that need technology to counteract diabetes or heart attacks will only grow dramatically in the future.
Companies that are leading the health smartwatch industry are Apple and Fitbit. Currently, Apple has produced a smartwatch with the help of the Stanford Medical School that scans for heart irregularities and increased rates in order to prevent strokes or heart attacks. On the other hand, Fitbit has created a watch that recognizes blood flow data that will alert users to possible heart problems. To sum it up, look for health tech offerings from both of these companies to be in high demand and make a great investment.
On the business side of the medical technology category, many of the investment categories above are used in conjunction within medical facilities and hospitals. Because of the lasting effects of COVID-19, many health insurance companies have had limited time to connect and meet the steadily growing number of patients. To counter this, many companies have begun to utilize AI-Based Chatbots, health monitoring technology, and even roving mobile treatment vans to best enhance the customer experience. Furthermore, the computer software these companies are using have begun to automate basic processes, collect and analyze vast amounts of data, and manage the security of each patient’s information. As each of these companies continues to develop and utilize these technologies, the health technology category will continue to grow making it an investment you should consider.
How Can We Help?
CBC has a long history of helping clients take advantage of new developments and investments in technologies. We specialize in leveraging a combination of technical knowledge and business acumen to help clients reach goals within the software, hardware, automotive, healthcare, and XR industries. If you’re looking to evaluate investments in new technology areas or bolster your existing technology infrastructure, we can help. Contact us to learn more.
