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The rapid growth of revolutionary technologies such as artificial intelligence, robotics, automation, and cloud computing has created significant investment opportunities. These technologies are promoting digital transformation in businesses and paving the way for other solutions such as metaverses, cryptocurrencies, and biotechnology. But with these opportunities come risks, making it important for investors to carefully consider their goals and risk tolerance.
In this article, we will discuss the most important emerging technologies that you should consider investing in and the potential they hold for the future. From artificial intelligence to cloud computing, here's how to capitalize on the growth of these game-changing technologies.
The rapid growth of disruptive technologies
- Artificial Intelligence (AI) The generative AI market could grow to $1.3 trillion by 2032, up from $40 billion in 2022, according to a report by Bloomberg Intelligence. Compound annual growth rate: 42 percent.
- Robotics – The industry could be worth $218 billion by 2030, up from $62.7 billion in 2022, according to GlobalData. Compound annual growth rate: >16 percent.
- Cloud computing – The cloud market could rise to $2.4 trillion by 2030, from $678 billion in 2023, according to Fortune Business Insights. Compound annual growth rate: 20 percent.
Emerging technologies you should consider investing in
Among the most influential technological developments are artificial intelligence, robotics, automation and cloud computing. These new emerging technologies are not only fueling digital transformation in businesses, but are paving the way for other solutions, including metaverses, cryptocurrencies, biotech, and many more.
Artificial Intelligence (AI)
At its core, AI attempts to emulate human intelligence in a computer or machine with greater speed and accuracy. Companies like Alphabet and Microsoft use technology to program machines to solve problems, answer questions, and perform tasks previously done by humans.
As with the human mind, the more information an AI receives and stores, the greater its potential. For example, the banking industry is using AI to improve decision-making in high-speed trading, automate back-office processes such as risk management, or even reduce costs using humanoid robots in branches. Likewise, AI powers self-driving cars and even Netflix movie recommendations.
But how does artificial intelligence become increasingly smarter? Through processes such as machine learning, a subfield of artificial intelligence. By combining big data, complex computational models, advanced mathematics, and other methods, machines have the ability to store and analyze new information at lightning speed. The more input they receive, the greater the accuracy.
As with other thematic investments – such as blockchain technology, cybersecurity and genomics – retail investors have access to AI-specific exchange-traded funds (ETFs). For example, the Global
Robotics and automation
Companies are also turning to robotics and automation to program robots to mimic human tasks, such as driving or even making the perfect coffee. These machines can perform jobs independently or with minimal human assistance, streamlining operations and improving efficiency.
The robotics industry consists of two main areas: industrial robots and service robots. Through rule-based software development and elegant user interfaces, robots have the potential to disrupt a significant portion of the labor market.
For example, Tesla developed a humanoid robot called Optimus and announced the latest version in late 2023. The robot is 5 feet 10 inches tall and weighs 130 pounds. It can perform jobs that would be boring or risky for humans.
Tesla CEO Elon Musk described the project as Tesla's “most important product development,” highlighting that it could be one possible solution to the labor shortage in the United States. Over time, the billionaire investor believes this may be more important than the company's auto business.
Likewise, companies like Amazon rely on robotics and automation to improve productivity, reduce costs, build flexibility, and increase worker safety. Autonomous mobile robots could eventually take over most physical tasks, from handing bags to employees to moving carts or unloading packages.
North American robotics sales set records in 2021 and 2022, with sales reaching $2.4 billion in 2022, according to the Society for the Advancement of Automation.
This trend is likely not to change, according to analysts, who explain that prolonged labor market shortages due to the pandemic have driven digital investments across industries.
Retail investors looking to get exposure to robotics and automation can access ETFs like the ARK Autonomous Technology & Robotics (ARKQ) and the ROBO Global Robotics Automation Index ETF (ROBO).
Cloud computing
Cloud computing supports on-demand access to data and information over the Internet, providing seamless connectivity and flexibility. Compared to traditional on-premises data storage, organizations have turned to the cloud to scale their digital ambitions, including artificial intelligence, robotics and automation.
In essence, the cloud provides the foundation for organizations to innovate faster. From achieving greater security to democratizing access to data across the enterprise, cloud computing continues to gain traction across industries.
For these reasons, companies like Amazon and Microsoft have aggressively expanded into the cloud market.
Amazon Web Services, the retail giant's cloud division, has become one of the dominant cloud computing platforms, generating revenue of $90.8 billion in 2023, up 13 percent from 2022. Likewise, Microsoft's cloud revenue reached $124.3 billion in calendar year 2023 .
Additionally, cloud computing adoption extends beyond enterprises, with governments and other institutions around the world adopting the technology to keep up with the pace of innovation.
As companies increasingly move their applications and operations to the cloud, some estimates position the cloud computing business as a trillion-dollar opportunity.
For those looking to get exposure to the cloud market, the Global
How to invest in new technologies
Investing in innovative technology can be an exhilarating journey, providing you with the opportunity to benefit from developments that could shape our future. To navigate this exciting landscape, consider the following strategies:
- Stores: Look for individual stocks within booming sectors such as artificial intelligence, robotics and mobile technology. By investing in these stocks, you are placing your bets directly on leading companies in advanced technologies.
- ETFs: ETFs provide a way to invest in a variety of emerging technology stocks, helping to balance your portfolio and mitigate risk.
- Thematic ETFs: These funds focus on specific aspects of the technology sector, such as artificial intelligence or robotics. This targeted approach allows for focused exposure to potential growth areas.
And remember, although emerging technologies can offer amazing growth potential, they also present higher risks due to the volatile nature of the technology sector. It is important for investors to prepare for market volatility and carefully consider their risk tolerance before committing funds.
Risks of investing in new technology
Investing in advanced technologies, although it may be rewarding, carries with it a number of risks. As an investor, it is important to be aware of these challenges to make informed decisions. Here are the main risks to consider:
- suspicion: Many emerging technologies are still in the development stages, making their market success unpredictable. This unpredictability can pose significant risks.
- Regulatory changes: The technology sector can be subject to sudden regulatory changes, which may impact emerging technologies, creating uncertainty and potential liabilities.
- Future growth expectations: Predicting future growth in new technologies is difficult. Balancing the potential for high returns with the risk of significant losses is crucial.
- Management Team: A technology company's success often depends on its leadership. A team's ability to navigate the complexities of the technology industry can significantly impact investment results.
- Competitive scene: The technology industry is fiercely competitive. The success of your investment can depend largely on the strategies and strength of competing companies.
Investing in emerging technologies can offer significant growth potential, but it is important to remember that they also come with higher risks due to the volatility of the technology sector. Always consider your risk tolerance and consider consulting a financial advisor before making investment decisions.
Editorial Disclaimer: All investors are advised to conduct their own independent research on investment strategies before making an investment decision. Additionally, investors are advised that past performance of an investment product does not guarantee future price appreciation.
