This is a sponsored article from Wellington Management.
Investors need a more holistic mindset to uncover investable opportunities within the tech and innovation space. Looking beyond the technology itself and examining the multifaceted real-world impacts of innovation may be the key to future-proofing and unlocking portfolio potential.
Focusing on the biggest tech names — like FAANG and BAT — can cause investors to overlook innovation’s pervasive impact on our lives and its equally ubiquitous opportunities. In Wellington’s new TechWELLcovered series, their technology team examines innovation through the lens of WELL — Work, Experience, Life stages and Legacy — to offer investors a way to think differently about their tech exposure and position themselves to invest in the technologies driving widespread disruption.
Here, we profile their insights on how innovation is fuelling the next phase of growth as technologies like AI and machine intelligence reimagine the future of work to enhance creativity and transform experiences outside of work through personalisation.
Tech innovations solving today’s problems
Tech has already helped to mitigate some of life’s biggest frustrations. Take work for example: whatever your industry, the work of the past was error-prone, time-consuming and labour-intensive. Today, countless innovations make smarter, faster, increasingly flexible and more scalable work possible. For instance, in e-commerce, tools like barcode cameras, machine-vision-enabled bin-picking, cloud-based inventory management systems, 5G and AI enable unparalleled efficiency.
From factory automation to cloud-based accounting software, innovations are solving problems and enabling companies to focus on more value-added work. Importantly, historical evidence suggests tech doesn’t put people out of work: increasing automation has led to new hiring even in labour-intensive industries like steel, textiles and automotives, compared to when they were artisan industries.
Wellington’s technology team believes innovation simply eliminates mundane tasks and enhances human capabilities such as creativity, driving higher-quality results and greater worker satisfaction.
Or consider experiences outside of work, which are evolving just as rapidly. Do you remember rushing home at precisely 8pm to catch the show everyone was watching? Or waiting endlessly for your favourite song to play on the radio? Many experiences of the past were intended for the masses and bound by time and geography.
“Today’s experiences are personalised by algorithms and harness cloud computing to stream content on demand. They are available anywhere and anytime via mobile data networks and connected devices”, says Brian Barbetta, global industry analyst at Wellington. “The smartphone, for example, solves countless problems. It may be the last gadget that everyone needs.”
Innovative technologies creating tomorrow’s opportunities
Wellington’s research engagements with management teams, suppliers and industry experts make them increasingly excited about the opportunities ahead as tech persistently enhances work and experiences.
At work, AI and machine intelligence continue to evolve from robots learning to sort and select items, to machine vision differentiating shapes and AI assisting human decision making with improved pattern recognition. This progress will impact every type of work. For example, AI is already more diagnostically accurate than human doctors in some areas.
“We’re seeing innovative companies fuel advances in machine intelligence that enable more creative, higher-impact work across every industry”, says Yash Patodia, global industry analyst at Wellington. “These range from a small-cap Japanese machine vision provider to a mid-cap Australian creator of cloud-based accounting software to a mega-cap American maker of robotic surgical equipment.”
Notably, the future of fun may see even more dramatic innovation. “Tech will soon drive countless new forms of experiences tailored to your interests and seamlessly integrated into your life, creating opportunities in virtual travel, augmented reality shopping and much more”, says Brian Barbetta.
Imagine your family’s future visit to the Egyptian pyramids, transformed by next-gen cameras leveraging AI-enhanced machine vision to track your progress through the site. Augmented reality glasses could overlay the building with the restored architecture, murals and artifacts of millennia ago. Moreover, an AI-powered assistant could curate a personalised tour for each member of your family based on your favourite topics — from the building’s architecture to its use in Hollywood films.
Innovations like virtual, augmented and mixed reality technologies have innumerable potential applications. The hardware and software markets thus have the potential to see significant growth in the next few years (Figure 1).
Or consider the future of gaming, which will see AI, 5G and more powerful hardware unlock personalised, on-the-go gaming for everyone, everywhere, using a variety of devices. The Pokémon Go craze gave a glimpse of the likely future as mobile gaming turns increasingly viral.
“In our view, gaming will also offer a growing fintech opportunity as digital assets within games create huge new markets powered by digital payments, the blockchain and non-fungible tokens”, says Bruce Glazer, global industry analyst at Wellington. “A gaming metaverse may tie all these experiences together in a seamless virtual world that mirrors the offline world.”
The evolution of AI, machine intelligence and other rapidly advancing innovations has the potential to drive widespread disruption and fuel huge opportunities in the future of work and experiences.
Investing in the lifeblood of technological progress
To future-proof their portfolios, Wellington thinks investors need deep research capabilities to keep up with today’s rapidly expanding tech use cases. Whatever path the futures of both work and fun take, their team believes today’s hardware and software advancements in connectivity, computing power and machine intelligence will be the critical catalysts for tomorrow’s limitless innovation.
“In today’s opportunity set, we’re particularly excited about the many investable companies working to advance these foundational technologies — or the ‘picks and shovels’ of innovation”, says Yash Patodia. “For instance, a large-cap Dutch firm making extreme ultraviolet lithography equipment for today’s cutting-edge chips and a mid-cap Taiwanese company helping to advance 5G are among the innovators that we think will fuel countless future advances in work and experiences.”
To take advantage of these rapidly growing opportunities, we believe that investors must identify the right trends and the right companies at the right time. Is your tech exposure ready to capture this potential?
To explore what it means to have tech WELLcovered, visit Wellington’s tech and innovation website or read their full research insights on the future of work and experiences.
This is a sponsored article from Wellington Management.
1 Source: TechCrunch, November 2020.
2 Sources: Company reports, the Australian Academy of Science and Wellington Management. September 2021.
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