ARK Invest believes that capitalizing on disruptive innovation and developing technologies is an essential and viable investment strategy. Yet such an investment approach that looks to displace older technologies or to create new markets may not, in fact, produce robust results. Risks of investing in innovation include acknowledging its rapid pace of change, exposure across a variety of sectors and market cap, uncertainties and unknowns, regulatory hurdles, political or legal pressure, and a competitive landscape.
But when disruptive innovation works, wow, it is exciting. So, if you’re interested in intriguing disruptive innovation frameworks, look no further than ARK Invest’s Big Ideas 2024 research report. It offers some really heady thoughts.
- Technological convergence could create tectonic macroeconomic shifts more impactful than the first and second industrial revolutions.
- Globally, real economic growth could accelerate from 3% on average during the past 125 years to more than 7% during the next 7 years as robots reinvigorate manufacturing, robotaxis transform transportation, and artificial intelligence amplifies knowledge worker productivity.
- Catalyzed by breakthroughs in artificial intelligence, the global equity market value associated with disruptive innovation could increase from 16% of the total to more than 60% by 2030.
- The annualized equity return associated with disruptive innovation could exceed 40% during the next 7 years, increasing its market capitalization from ~$19 trillion today to roughly $220 trillion by 2030.
Converging technologies are generating a historical technological wave. Individual technology advances can coalesce and cascade into massive new market opportunities, and the impact of these technologies on the market could be dramatic.
According to ARK’s research, convergence among disruptive technologies will define this decade. Five major technology platforms—Artificial Intelligence, Public Blockchains, Multiomic Sequencing, Energy Storage, and Robotics—are coalescing and should transform global economic activity. While you should read the full report to grasp the nuances of disruptive innovation, below are highlights from the ARK forecasts for each of these tech platforms.
Artificial Intelligence: ARK sees AI serving as the central technology catalyst, as it is accelerating faster than forecasters anticipated. It has already boosted productivity significantly, and foundational models are improving across domains. The convergence of hardware and software could drive AI training costs down by 75% at an annual rate through 2030.
Computational systems and software that evolve with data can solve intractable problems, automate knowledge work, and accelerate technology’s integration into every economic sector. The adoption of Neural Networks should prove more momentous than the introduction of the internet and potentially create 10s of trillion dollars of value. At scale these systems will require unprecedented computational resources, and AI-specific compute hardware should dominate the Next Gen Cloud datacenters that train and operate AI models. The potential for end-users is clear: a constellation of AI driven Intelligent Devices that pervade people’s lives, changing the way that they spend, work, and play. The adoption of artificial intelligence should transform every sector, impact every business, and catalyze every innovation platform.
Public Blockchains: Digital assets like Bitcoin are a new asset class, and, according to ARK’s research, bitcoin has emerged as an independent asset class worthy of a strategic allocation in institutional portfolios. In 2023, Bitcoin’s price surged 155%, increasing its market cap to $827 billion.
Upon large-scale adoption, all money and contracts likely will migrate onto Public Blockchains that enable and verify digital scarcity and proof of ownership. The financial ecosystem is likely to reconfigure to accommodate the rise of Cryptocurrencies and Smart Contracts. These technologies increase transparency, reduce the influence of capital and regulatory controls, and collapse contract execution costs. In such a world, Digital Wallets would become increasingly necessary as more assets become money-like, and corporations and consumers would adapt to the new financial infrastructure. Corporate structures themselves may be called into question.
Multiomic Sequencing: Increasingly, precision therapies are becoming multiomic and curative, with mechanisms of action spanning DNA, RNA, proteins, and more. Based on ARK’s research, the enterprise value of companies focused on precision therapies could appreciate 28% at an annual rate during the next 7 years, from ~$820 billion in 2023 to ~$4.5 trillion by 2030.
The cost to gather, sequence, and understand digital biological data is falling precipitously. Multiomic Technologies provide research scientists, therapeutic organizations, and health platforms with unprecedented access to DNA, RNA, protein, and digital health data. Cancer care should transform with pan-cancer blood tests. Multiomic data should feed into novel Precision Therapies using emerging gene editing techniques that target and cure rare diseases and chronic conditions. Multiomics should unlock entirely new Programmable Biology capabilities, including the design and synthesis of novel biological constructs with applications across industries, particularly agriculture and food production.
Energy Storage: ARK forecasts that electric vehicle sales will scale 33% at an annual rate during the next seven years, from roughly 10 million in 2023 to 74 million in 2030.
Declining costs of Advanced Battery Technology should cause an explosion in form factors, enabling Autonomous Mobility systems that collapse the cost of getting people and things from place to place. Electric drivetrain cost declines should unlock micro-mobility and aerial systems, including flying taxis, enabling business models that transform the landscape of cities. Autonomy should reduce the cost of taxi, delivery, and surveillance by an order of magnitude, enabling frictionless transport that could increase the velocity of e-commerce and make individual car ownership the exception rather than the rule. These innovations combined with large-scale stationary batteries should cause a transformation in energy, substituting electricity for liquid fuel and pushing generation infrastructure towards the edge of the network.
Robotics: Robots are outperforming humans in factory settings and should do so in many domains. As hardware and software costs decline according to Wright’s Law, AI should continue to improve productivity and create a new market opportunity for generalizable robotics that, at scale, exceeds $24 trillion in revenue annually.
Catalyzed by artificial intelligence, Adaptive Robots can operate alongside humans and navigate legacy infrastructure, changing the way products are made and sold. 3D Printing should contribute to the digitization of manufacturing, increasing not only the performance and precision of end-use parts but also the resilience of supply chains. Meanwhile, the world’s fastest robots, Reusable Rockets, should continue to reduce the cost of launching satellite constellations and enable uninterruptible connectivity. A nascent innovation platform, robotics could collapse the cost of distance with hypersonic travel, the cost of manufacturing complexity with 3D printers, and the cost of production with AI-guided robots.
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