Hypersonic flights, 3D-printed humanoid robots, groceries delivered by drones, molecular biomarkers for early detection of malignant tumors – these are just a few of the many goods and services that could revolutionize marketplaces over the course of this decade, according to Cathie Wood’s ARK Invest.
This is the conclusion of her annual Big ideas report published by her money management firm on Tuesday. This 153-page deep dive seeks to demystify the potential commercial opportunities that await those startups and incumbents who quickly embrace promising new technologies that will replace older, obsolete technologies.
Having cast her eye on everything from smart crypto contracts to orbital spaceflight, Wood believes companies that succeed in disrupting existing industries will experience “super-exponential growth”, increasing their cumulative value at an average annual rate of 40 % increasing in the process to a staggering $200 trillion by 2030.
To put that mammoth figure into perspective, last April the International Monetary Fund estimated that the size of the entire world’s economy would surpass the $100 trillion mark in nominal GDP terms by the end of the year.
“The market value associated with disruptive innovation could account for the largest share of global stock market capitalization,” the report concluded.
Wood’s team identifies 14 different technologies that they believe will feed off each other, broadly converging into five overarching investment themes (“innovation platforms”) grouped around artificial intelligence, robotics, energy storage, public blockchains and the multi-omic sequencing of digitized biological data.
Courtesy of ARK Investment Management LLC
The advances currently being made in the field of deep neural networks support them all.
A form of machine learning that improves the more data they are fed, their ability to train over time allows them to extrapolate and infer outcomes with increasing accuracy, much as a human would.
These artificial brains, which power innovations like OpenAI’s ChatGPT, could quadruple the productivity of knowledge workers by the end of the decade, according to ARK Invest.
“Breakthroughs related to energy storage and robotics alone could add 30% to real GDP by 2030,” it wrote, “and AI could dwarf both of their contributions.”
ARK Invest takes a different approach than Wall Street, but its risks are high
Wood is something of a tech guru notable for her early, accurate predictions of Tesla’s extraordinary bull run that once earned it a $1 trillion valuation by the end of 2021.
Importantly, her firm does not employ your typical Wall Street analyst.
Instead of emphasizing spreadsheets and valuation models that often focus on short-term fundamentals such as a company’s forward-year cash flow or earnings per share, her ARK Invest research team prefers a top-down analysis of what macroeconomic problems are driving social progress. inhibits before she examines which innovators are doing the most to solve them.
Many of the research conclusions in Big ideas is based on predicting when technologies may reach mass market maturity using Wright’s Law, a general theory from 1936 that attempts to model cost-deterioration curves over time. Wood borrows so much from it in her research that it has its own web page on her ARK Invest site.
Since the report takes a helicopter view of the broader tech sector, it doesn’t come up with the usual recommendations of which individual stocks it believes investors should buy or sell.
But Woods is known to favor companies like Tesla that offer exposure to several different disruptive innovations at once, such as electric vehicles, energy storage, robotics and artificial intelligence.
Given her emphasis on investing early in emerging technologies that are often commercially untested, the risks inherent in her multi-themed exchange-traded funds are high — both upside and downside.
In 2022, the worst year for US stocks since the global financial crisis, her eight ETFs each lost between a third and two-thirds of their value.
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