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Technology at the Service of Humans: Building blocks
This year will see the first investments in mobile network infrastructure of the fifth generation (5G). With 5G, the speed and latency of data transmission in networks will rise materially, taking digitalization to the next level. As a result, the number of mobile devices that can be connected to the internet – in cars, gadgets, buildings etc. – is expected to continue to rise exponentially. 5G technology will offer new ways to collect, analyze, manage and monetize data in real time. We are likely to see more objects and devices that have “eyes and ears” and even the “brainpower” of humans. In our view, this will offer significant new opportunities for artificial intelligence (AI), healthtech, automatization and virtual reality (VR) or augmented reality services.
The importance of diversification
Yet to ensure that these technologies benefit society, policymakers will likely seek tighter regulation. This might increase company-specific risks, particularly for the big Internet companies. This is why we recommend diversifying away from regulatory and policy risks into other attractive areas of digitalization.
Further rise in number of connected devices expected post-5G rollout
Blockchain technology an attractive proposition
One of these areas is the blockchain technology, which makes a collaboration of several parties in a business process very transparent and safe. We believe that companies with blockchain exposure should have a competitive advantage in the long term. We see the biggest potential in industry-wide blockchain, smart contracts and the tokenization of real assets. Since such blockchain projects are more private in nature than public crypto blockchain (think bitcoin), companies will design them in a more efficient way and avoid key hurdles to adoption, namely governance issues. As with all nascent technologies, there is considerable uncertainty regarding the success of blockchain systems, but coordinated efforts of leading companies across industries underscore the business potential of blockchain.
Another way to diversify is through mid-cap companies in the Software-as-a-Service sector. Enterprise investments in AI and digitalization software in the cloud (be it for hybrid, public or private clouds) are rising and seeing accelerating growth.