At the beginning of 2020, before the outbreak of Covid-19, we talked about the extent to which new, fast-growing technologies such as artificial intelligence (AI), the Internet of Things (IoT), big data and blockchain continue to increase the disruptive power of technology and the The division into winners and losers would reinforce. In our opinion, these technologies, in conjunction with the network effect, in which the value and benefits of a network increase exponentially with the number of users, represent a fourth generation digital revolution. We assume that this revolution will continue to accelerate once the Covid-19 crisis is over.
The fourth wave or, as we call it, “Digital 4.0” will be bigger and stronger than its predecessor. Digital 1.0 consisted of thousands of mainframes that were installed and used in the 1970s. Millions of client-server systems that dominated the 1980s and 1990s represented the second wave, while the proliferation of billions of smartphones in the 2000s led to “Digital 3.0”. We are currently heading towards the networking of billions of devices to the Internet of Things, while big data and AI are flowing into a new age of growth and connectivity, changing business models and creating new investment and investment opportunities. Risks therefore always arise for investors precisely when they are stuck in a previous phase and do not position themselves appropriately for the next phase.
Instead of just holding onto the heavyweights (Amazon, Facebook and Google), we believe that investors should definitely track down the companies that will be among the main beneficiaries of this next phase. We anticipate that healthcare, transportation, and industry will be the three areas where investments in disruptive technologies will be focused in the next five to ten years. Each of these sectors could benefit from the “Digital 4.0” wave. The tech giants that have helped a number of major indices soar over the past decade may not offer such opportunities.
Digital healthcare relies on modern technology, networking and the merging of information into a comprehensive medical history and medical record of the patient in order to ensure high-quality medical treatment. It is estimated that digital healthcare market valuations are likely to surge to over $ 639.4 billion by 2026, from $ 106 billion in 2019. It is expected that the growing number of smartphone users worldwide will be a key factor in the growth of this market. Rapid expansion of the infrastructure for health IT in industrialized and developing countries could also promote growth. In addition, the growing fitness and health awareness among the population is another motor for market growth and increased product acceptance.
We firmly believe that technology is the greatest hope for controlling rising healthcare costs. For example, electronic health records will help reduce costs significantly. We see very good opportunities in using AI, IoT and 5G technology to provide qualified and well-founded specialist knowledge in hospitals in rural areas or in remote locations. In addition, better and faster analysis capacities should enable the early detection of serious diseases, while big data and AI will accelerate the development of models in disease and pharmaceutical research. In short, there are many areas that can potentially save billions of dollars.
Roughly estimated, the global transport market accounts for around ten percent of the global gross domestic product (GDP). Hence, disruptive technologies can create enormous opportunities in this sector. However, in recent years, many traditional transport companies have underperformed. On the other hand, electric vehicles, the topic of “shared mobility” and autonomous driving are receiving a lot more attention. It is estimated that around 6.6 million units were sold in the autonomous vehicle market alone in 2017 – a figure that should increase to 67.5 million by 2028. This corresponds to an annual growth rate of 20.78 percent for the forecast period. This forecast growth is also reflected, for example, in the valuation of Tesla shares. Their price rose to astronomical heights last year. We are convinced that companies that are active in segments such as vehicle operating systems, computer platforms and “Transport-as-a-Service” (TaaS) will open up further opportunities. In contrast, the “ride sharing” market (Uber, Lyft) is still far from the ideal model.
In our opinion, the next industrial revolution is already in full swing. It is driven by developments in the areas of IoT, 5G, Big Data and AI. Companies are already using technology in all segments of the industrial value chain to achieve higher returns on capital. The factories of the future are expected to consist of predictive machine analyzes, systems for “Enterprise Resource Planning” and supply chain management based on blockchain, cooperative robots (“Kobots”) and industrial solutions for “Augmented Reality”. We believe that 5G in conjunction with the IoT will trigger an enormous new wave of innovation in all areas of production.
Which global stocks will ultimately be among the winners or losers will, in our opinion, depend on whether and to what extent the companies concerned use disruptive technologies. The fourth digital revolution is likely to accelerate change and change even more. With its basic technologies 5G, Big Data and AI, the Internet of Things will set a digital wave in motion that will be bigger and stronger than any other before it. We are convinced that new winners will emerge who take advantage of the unique digital network effect that enables exponentially increasing profits. Healthcare, transportation and industry will be the three priority areas for high investment in the next decade.
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