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The rapid growth of disruptive technologies such as artificial intelligence (AI), robotics and automation, and cloud computing has created significant investment opportunities. These technologies are driving digital transformation in business and paving the way for other solutions such as the metaverse, cryptocurrencies and biotechnology. But these opportunities come with risks, making it important for investors to carefully consider their objectives and risk tolerance.
In this article we discuss the key emerging technologies we can invest in and the potential they offer for the future. From AI to cloud computing, here’s how you can benefit from the growth of these breakthrough technologies.
The rapid growth of disruptive technologies
- Artificial Intelligence (AI) – According to a report from Bloomberg Intelligence, the generative AI market could grow to $1.3 trillion by 2032, up from $40 billion in 2023. Compound annual growth rate: 42 percent.
- Robotics – According to GlobalData, the industry could reach a value of $218 billion by 2030, up from $62.7 billion in 2023. Compound annual growth rate: >16 percent.
- Cloud computing – According to Fortune Business Insights, the cloud market could grow to $2.4 trillion by 2030, up from $678 billion in 2023. Compound annual growth rate: 20 percent.
Emerging technologies to invest in
Among the most impactful technological developments are artificial intelligence, robotics and automation, and cloud computing. These top new emerging technologies are not only driving digital transformation in business, but also paving the way for other solutions including the metaverse, cryptocurrencies, biotechnology and many others.
Artificial Intelligence (AI)
At its core, AI seeks to replicate human intelligence in a computer or machine with higher speed and greater accuracy. Companies like Alphabet and Microsoft are using the technology to program machines to solve problems, answer questions and perform tasks previously done by humans.
And just like the human brain, the more information 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 by deploying humanoid robots in branches. Likewise, AI powers self-driving cars and even Netflix movie recommendations.
But how does AI become gradually smarter? Through processes such as machine learning, a subfield of AI. By combining big data, complex computer models, advanced mathematics and other methods, machines have the ability to quickly store and analyze new information. And the more input they receive, the greater the accuracy.
Like other thematic investments – such as blockchain technology, cybersecurity and genomics – retail investors have access to AI exchange-traded funds (ETFs). For example, the Global X Robotics & Artificial Intelligence ETF (BOTZ) fund holds a basket of companies involved in all stages of AI, from development to implementation.
Robotics and automation
Companies are also turning to robotics and automation to program robots to mimic human tasks, such as driving a car or even making the perfect latte. These machines can perform tasks independently or with minimal human assistance, streamlining processes and improving efficiency.
The robotics industry includes two main areas: industrial robots and service robots. By developing rules-based software and streamlined user interfaces, robotics has the potential to disrupt much of the job market.
For example, Tesla has developed a humanoid robot called Optimus and announced the latest version in late 2023. The robot is 1.80 meters high and weighs 130 kilos. It can perform tasks that are tedious or risky for humans.
Tesla CEO Elon Musk has labeled the project as the “major product development” for Tesla, highlighting that it could be a potential solution to the labor shortage in the United States. And over time, the billionaire investor believes this could be even more important than the company’s auto business.
The same goes for companies like Amazon relies on robotics and automation to improve productivity, reduce costs, build resilience and increase worker safety. Autonomous mobile robots could eventually take over most physical tasks, from delivering totes to employees to transporting carts or emptying packages.
Sales of robots in North America set records in 2023 and 2023, with sales reaching $2.4 billion in 2023, according to the Association for Advancing Automation.
And the trend is unlikely to change, say analysts, who explain that the prolonged labor market tightness caused by the pandemic has boosted digital investment across sectors.
Retail investors looking to gain exposure to robotics and automation can access ETFs such as ARK Autonomous Technology & Robotics (ARKQ) and 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 AI, 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 organization, 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, with revenues of $90.8 billion in 2023, up 13 percent from 2023. Similarly, cloud revenues reached of Microsoft in the calendar year 2023 $ 124.3 billion.
Furthermore, cloud computing adoption is transcending businesses as governments and other institutions around the world embrace the technology to keep up with the pace of innovation.
As companies increasingly move their applications and operations to the cloud, some estimates see the cloud computing business as a $1 trillion opportunity.
For those looking to gain exposure to the cloud market, the Global X Cloud Computing ETF (CLOU) and First Trust Cloud Computing ETF (SKYY) invest in this space.
How to invest in new technologies
Investing in innovative technology can be an exciting journey, giving you the opportunity to make advances that could shape our future. Consider the following strategies to navigate this exciting landscape:
- Shares: Look at individual stocks within booming sectors such as AI, robotics and mobile technology. By investing in these stocks, you are placing your bets directly on companies that are pioneering breakthrough technologies.
- ETFs: ETFs provide a way to invest in a diversified selection of emerging technology stocks, balancing your portfolio and moderating risk.
- Thematic ETFs: These funds focus on specific facets within the technology sector, such as AI or robotics. This targeted approach enables concentrated exposure to potential growth areas.
Remember that while emerging technologies can offer impressive growth potential, they also come with higher risks due to the volatile nature of the technology sector. It is critical that investors brace for market fluctuations and thoroughly consider their risk tolerance before committing any money.
Risks of investing in new technology
Investing in advanced technologies, while potentially rewarding, also comes with its own risks. As an investor, it is crucial to be aware of these challenges in order to make well-informed decisions. These are the main risks to consider:
- Insecurity: Many emerging technologies are still in the development phase, making their market success unpredictable. This unpredictability can entail significant risks.
- Regulatory changes: The technology sector may be subject to sudden regulatory changes, which may impact emerging technologies, creating uncertainty and potential liabilities.
- Future growth predictions: Predicting future growth in new technologies is a challenge. It is critical to strike a balance between the potential for high returns and the risk of significant losses.
- The management team: The success of a technology company often depends on its leadership. The team’s ability to navigate the complexities of the technology industry can have a major impact on investment results.
- Competitive landscape: The technology industry is fiercely competitive. The success of your investment may 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 any investment decisions.
Editorial Disclaimer: All investors are advised to conduct their own independent research into investment strategies before making any investment decision. In addition, investors are advised that the past performance of investment products does not guarantee future price increases.
