A lyric from one of my favorite contemporary hard rock songs is playing loudly in my head.
Let me explain. As a boomer “of a certain age,” I like to keep in shape with exercise and also remain young at heart.
That’s why I have put together a killer list of hard rock songs from modern bands like Halestorm, Pop Evil, Shinedown and Papa Roach. When I hit the gym or the slopes up at Tahoe, I have 54 playlists each with 14 songs to choose from.
And right now, I can hear Godsmack’s “I Stand Alone,” the hit song from the movie “The Scorpion King” on mental repeat.
I believe it’s an appropriate soundtrack for my 2019 tech forecast I told you about on Jan. 1. At the time, the media was barraging us with stories about an impending “recession.”
But I stood apart from the crowd and predicted a strong year tech.
With that in mind, I’m updating my forecast to show you why there’s still lots of money to be made and how to get in on the action…
Back in January, I told you about four solid catalysts for tech investors. I will review those in a moment.
But first, I want to talk with you about that original forecast and why I’m standing by it.
Fact is, the economy is in about as good a shape as I can ever remember. Yes, I was hoping to see more than 2.1% U.S. GDP growth for the second quarter.
However, given all the negative headlines about slowing growth in Europe and our trade tensions with China, it’s a pretty robust report.
Here’s the thing. Consumer spending more than offset a decline in industrial output. This is very important because it’s hard to have a recession when folks are busy spending money.
And let’s not forget that housing sales grew 4% in June from the same month in 2018.
In other words, for us to have a recession, which is defined as two quarters of negative GDP, we’d have to consumers basically freak out and bring the economy to a screeching halt.
Color me crazy, but the odds of that happening in the midst of the best jobs boom since 1969 seems remote at best.
On top of all that good macro data, we have tech putting the economy and market into overdrive, pretty much on track from my Jan. 1 forecast.
I told you I saw four “Fort Silicon Valley Catalysts.” Let’s take a look at how they’re doing:
Fort Silicon Valley Catalyst No. 1: 5G Wireless Broadband
Back in March, cellular tech hit a new milestone. The breakthrough bodes well for a series of advances we’ll see brought about by high-speed 5G systems.
Using such devices, a Chinese surgeon performed the world’s first remote brain surgery. From roughly 2,000 miles away, he implanted a neurotransmitter into a patient’s brain.
Then last month we got word from a reviewer at the Wall Street Journal that 5G is lightening fast. She downloaded an entire season of “Stranger Things” from Netflix Inc. (NFLX) in just 34 seconds.
Now you know why this will be such a fertile field. Every single major U.S. and foreign carrier has already started or is in the midst of launching 5G networks this year.
Device makers are following suit.
Two weeks ago, we learned that all three of the 2020 iPhones from Apple Inc. (AAPL) will be 5G ready. Apple is doing that to compete with the plethora of 5G-centric handsets that will run on the Android operating system.
And as I predicted, the White House is pushing this technology. In April, President Trump said he will free up as much wireless spectrum as he can to accommodate the new 5G standard.
Fort Silicon Valley Catalyst No. 2: Edge Computing
In just the last few days, we heard that two giant tech leaders forged a new pact that will help each of them with their forays into this fertile new field.
You may recall this is critical technology that can help fuel advances in multiple tech drivers. I forecast the edge will be a particularly big help for drones and driverless cars – and for millions of 5G devices.
So, a new pact between International Business Machines Corp. (IBM) and AT&T Inc. (T) speaks volumes. The news came just one week after IBM finalized its $34 billion buyout of open source leader Red Hat.
AT&T signed on because the Red Hat-IBM systems give the wireless provider cutting-edge apps for edge computing and the closely related Internet of Everything (IoE).
Simply stated, we can’t have a robust IoE without edge systems. These operate locally, say on connected cars, rather than rely on sending and receiving data to and from a remote network center.
Over the next few years, at least 50 billion devices will all be talking to each other. Eventually, the number of connected devices will rise to 1.4 trillion.
A new research report forecasts blazing growth. The report by Market Research Future doesn’t give a total industry size. But it does say the sector will grow at average of 27.3% through 2022. At that rate, the field will double in sales roughly every 2.5 years.
Fort Silicon Valley Catalyst No. 3: Artificial Intelligence
In my original 2019 forecast, I noted that “artificial intelligence is now seeping into every aspect of our lives, from how we interact with our voice-activated digital assistants to how biopharma finds new drugs.”
It looks like I was a little too conservative.
Consider that roughly three weeks ago, the Pentagon touted AI as essential tech. At his senate confirmation hearing, defense secretary nominee Mark Esper said AI has the ability to fundamentally change warfare.
Esper also said the first country to fully harness the AI will gain long-term dominance. He went on to say that he considers the tech the Pentagon’s top priority.
And he should know. Esper earlier served as the head of the Army. Last February, the service started an AI task force at Carnegie Mellon University.
These two developments are more important than they sound. The reason: the U.S. military has played a vital role in pushing the boundaries of American high tech for decades.
Meantime, corporations are getting on board.
Consider what’s happening with the The Coca-Cola Co. (KO). The firm serves more than 1.5 billion drinks a day across 500 brands. These are dispensed in more than 200 countries.
It’s just the type of operation that requires complex delivery and data systems where AI can play a role. In May, the firm’s head of digital innovation said AI is “the foundation of everything we do.”
No wonder a recent study by Accenture found that in 12 advanced economies with combined GDPs of roughly $61 trillion, AI can double economic growth by 2035. Part of that bump will come from a 40% boost in productivity.
Fort Silicon Valley Catalyst No. 4: Automated Systems
For years now, we’ve heard a steady stream of naysayers criticize robotics and other aspects of automated systems.
The party line is that it will lead to mass unemployment and make jobs from offices to factories more boring.
I never bought into this line of thinking. Indeed, I believe that automated systems are helping make work better and more plentiful. We are now witnessing huge growth in automated systems in the midst of a historic jobs boom.
But you don’t have to take my word for it.
Verint recently surveyed 34,000 workers in 18 countries and found that overall they love automation.
Some 72% of those reporting low stress at work cited the use of greater technology for their happiness. And 64% said automation technology helps reduce their workloads.
I believe this survey will be a big boon to the field. Employers need automation because there simply are not enough workers as Baby Boomers retire fast than millennials can replace them.
Now you know why the global robotics and automation sector will be worth $135 billion this year, according to a forecast from IDC. And Statista believes that market will hit $498.6 million in 2025.
Clearly, tech is absolutely brimming with exciting opportunities.
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Cheers and good investing,
Michael A. Robinson