Bank of America Global Research group strategists published a list of what they call technology “moonshots” to help guide long term investors in their search for the next Tesla, Amazon or Apple.
Bank of America’s (BofA) Global Research group published a list of 14 “moonshots (radical technologies of the future) that the researchers said could potentially change people’s lives and “accelerate the impact of global megatrends.”
Failing to identify future technology right now could mean missing out on the next big thing, Bank of America strategists say. https://t.co/CiCqn4Bc4D
— MarketWatch (@MarketWatch) September 16, 2021
From the sixth-generation telecom network that could download the entire collection of the New York Public Library in 20 seconds to wireless electricity, things that could radically change people’s lives are not far into the future as one might think, according to strategists led by Haim Israel, BofA’s head of global thematic investing research.
Investors have developed a growing appetite for thematic investing that focuses on understandable and relatable narratives. Led by Cathie Wood’s Ark Investment Management’s exchange-traded funds, which is focused on an “innovative disruptive technology” market niche, have attracted $42 billion of fresh money this year — surpassing the total inflows for the whole year of 2020, according to data compiled by Bloomberg Intelligence show.
Getting early into the next big thing has been crucial for one’s success in stock investing. In the past three decades, just 1.5% of companies accounted for all the wealth created in the global stock market, BofA said, citing a study from Hendrik Bessembinder, an Arizona State University professor.
Meanwhile, incumbents are displaced at a faster rate because of accelerating innovations. Take the life span of S&P 500 companies for instance. In 1958, the average company lasted 61 years. That has shortened to 24 years by 2016 and is expected to be halved to just 12 years by 2027, BofA data show.
Investing in early innovators or moonshot companies often require a strong stomach for losses, both in terms of the bottom line and stock performance. And certainly, not everyone has the “temperament” that will allow them to succeed.
Yet, the reward from investing in the stars of tomorrow isn’t insignificant. “While moonshots start at a low market size, their disruptive nature means there is the potential for high growth,” said the BofA’s report.
Currently, the BofA team estimated that the 14 moonshot technologies represent only $330 billion in market size. Cumulatively, they could increase 36% a year to $6.4 trillion by the 2030s. For context, profits from S&P 500 companies have grown 6% a year historically.
“These moonshots could transform and disrupt multiple industries, contributing to the next big cycle of technology-driven growth,” BofA’s report revealed. Since “the adoption of many technologies—like smartphones or renewable energy—have surpassed experts’ forecasts by decades, because we often think linearly, while the progress actually occurs exponentially.”
14 moonshot technologies for the future. (Source: BofA Global Research)
Below is the list of BofA’s 14 moonshot technologies:
- 6G telecom networks
- Emotional artificial intelligence
- Brain computer interfaces
- Bionic humans
- Immortality
- Synthetic biology
- Wireless electricity
- Holograms
- Metaverse
- Electric vertical takeoff and landing flying cars
- Oceantech
- Next generation batteries
- Green mining
- Carbon capture and storage
Take fifth-generation (5G) cellular wireless networks. The technology is still in the initial stages of roll-out across the globe, but it will not be able to handle the exponential growth of data transmission in the next 10 years. Sixth-generation (6G) network could enable speeds up to 400 times faster than 5G, the report noted.
“These technologies must have the potential to be economical and cost-competitive. Besides, there should be mass adoption of new products that must address a gap in the market and solve a key problem … such as climate change or improve the quality of life,” noted the 2019 BofA report.
References:
- https://www.bofaml.com/en-us/content/market-strategies-insights/weekly-market-recap-report.html
- https://www.thewealthadvisor.com/article/bofa-identifies-tech-moonshots-catch-next-apple-amazon
- https://financialpost.com/pmn/business-pmn/bofa-identifies-tech-moonshots-to-catch-next-apple-amazon
- https://finance.yahoo.com/news/moonshot-green-tech-bank-of-america-170156711.html
- https://www.thenationalnews.com/business/technology/bank-of-america-15-radical-technologies-will-transform-the-future-1.922278