7 Sectors To Watch Out For High Tech Investment
Report released that for high technology investments, Here are the top 7 sectors to watch out for.
High tech is an emerging digital landscape. Only the most ardent futurist circa 1968 -- the year "2001: A Space Odyssey" was released -- could've predicted the dramatic, digitized landscape that is 2016. "There are lots of new technologies that hold massive potential for change," says Jason Meil, managing director of new products and innovation for management consultants SSA & Co. "The question is which will actually have a meaningful impact on businesses and consumers, and therefore be around for the long term." Once the answers become apparent, investors will follow, backing companies that make those technologies spring to life. Here's a look at seven areas of high tech to pay attention to for their rich investment opportunities.
Financial technology: Fintech is "in" tech.
Even the biggest banks must reckon with fintech's power to reshape financial services. Zacks Investment Research reports that corporate investments in fintech in the second quarter of 2016 hit about 33 percent, compared to 23 percent this time last year. Expect mobile and electronic payments companies, along with peer-to-peer lenders, to lead the charge -- though that doesn't mean champagne for all. Since going public, Lending Club (ticker: LC) has seen share prices tumble almost 80 percent; the stock trades just above $5 per share.
The tech investor's drug of choice.
Biosimilars are the generic equivalents of "biologic" drugs. "Historically, drugs have been made from naturally occurring or synthetic chemical compounds. Biologic drugs, by contrast, come from living cell lines grown in labs," says Charlie Smith, principal and CIO of Fort Pitt Capital Group in Pittsburgh. "When patent protection runs out on these biologic drugs, we get what are called biosimilars. Firms such as Amgen (AMGN) and Pfizer (PFE) have significant opportunity in this market because they have manufacturing expertise."
Lithium leads the charge.
An element discovered in 1817 might seem as low-tech as it gets -- until you stop to consider the role it plays in rechargeable batteries that populate a host of digital and sophisticated gadgets. "We are bullish on lithium as an important high-tech sector," says Jay Jacobs, director of research for Global X, a New York-based issuer of exchange-traded funds. "As electric vehicles and renewables grow in popularity, lithium consumption could possibly take off to help meet demand for car batteries and renewable energy storage."
The next level of video game tech.
It's easy to dismiss gamers as kings and queens of arrested development, but more accurate to credit their uncompromising standards for today's graphics-rich, high performance computers. Today's leading edge of gaming tech includes mobile gaming, virtual reality and augmented reality, says Andrew Chanin, CEO of PureFunds, based in New York. Yet just as with areas such as cybersecurity and drones, "it's difficult to predict which companies will be the leaders, which is why we take the indexed approach to offering exposures to many," Chanin says.
Big data still adding up.
Though "big data" has become a big catchphrase of the digital age, it's still a work in progress so far as investment goes. Says Meil: "Big data has been hyped for years, but I'd argue it still hasn't quite delivered on the promise -- yet. There is no question that the potential is enormous." In its 2016 international survey on big data, DNV GL reports that 76 percent of organizations plan to increase or maintain their big data investment over the next two to three years.
Cloud computing is improving.
Investment in this sector has even come from conventional companies. Ford Motor Co. (F) recently announced an investment in Pivotal Software, a private cloud computing and software company valued at $2.8 billion. "The enterprise cloud is also one of the most competitive spaces with rivals such as Amazon (AMZN), Google (GOOG, GOOGL) and Oracle (ORCL)," says K.C. Ma, director of the George Investments Institute at Stetson University in DeLand, Florida. "But if this is a fight of providing corporate customers support, then it's led by Microsoft (MSFT) and IBM (IBM)."
Frontier tech: The future is wow.
This term refers to a loose collection of technologies ranging from artificial intelligence toself-driving cars (or, if you like, autonomous autos). "It's called frontier tech for a reason. These technologies are still in nascent stages," says Minal Hasan, founder and general partner of the venture capital firm K2 Global. "Despite being the direction the tech sector is headed in, they won't gain critical consumer mass -- or for that matter investing interest with the public -- for many more years."