A thousand lightbulbs: Investments in technology

“Technology has always enabled people and companies to be more productive, but not everyone embraced it. Now they have no choice.” ~ Narasin.

Investment is the key that turns economies. A good investment climate means that business can operate with confidence, provide opportunities to expand, and stimulate job creation. Along with these positives comes the introduction of new technologies that further increase the potential for production and motivation for the market.

Investment obviously has a positive effect on the development of technology. Whether it is private domestic investment or foreign direct investment, it is input that drives greater know-how, efficiency, and competitiveness. Greater knowledge and development of improved  information technology contributes vitally to the growth of domestic business, and this in turn improves the overall local investment climate.

The evolution of technology has grabbed the interest of both the general public and investors alike as tech innovation continues to move forward at a remarkable speed. During the milestone year of 2000 the S&P 500’s technology index rose exponentially, while the NASDAQ reached an all-time high. More than 20 years later, the technology market still dominates with the success of giants like Facebook, Google, Apple, Amazon and Netflix.

Worldwide technological advancement is responsible for changing our society at a rapid rate. It is continuing to disrupt and reshape operations across a range of industries such as finance, property, transportation and healthcare. And it is this global impact that makes investing in tech so exciting. 

The phenomenal growth of technology investing

Music: The evolution of the music industry is one example of the hurry and hustle of technology. The industry has gone from vinyl to cassettes to compact discs to streaming in a relatively short space of time. The most notable streaming company emerging from this trend has been Spotify, which only made its entrance in 2018 and is now used by millions of subscribers.

Video-streaming: Video-streaming company Netflix has expanded to over 190 countries worldwide, and is expected to grow its subscriber base to over 260 million by 2025.

Amazon’s streaming services have also exploded in recent years, and are projected to reach 120 million to 150 million subscribers by 2025. Apple, with the platform Disney Plus, recently joined the ranks, launching video-streaming services with original content in late 2019. It is projected to reach over 170 million by 2025.

Cybersecurity: Along with the growth in technology, comes growth in cybersecurity technology; companies will need to create broader security awareness, and ensure proactive security systems are continually embedded into operations.

Blockchain: This is another tech disrupter, and already has millions of investors. It is set to hit nearly 30 billion US dollars in the next 5 years. Blockchain is believed by some to have the potential to transform payment systems.

Messaging: WhatsApp, the world’s largest messaging app, has connected millions around the globe, and now boasts over 2 billion users. Smartphones and e-sports round out further tech potential. In fact the potential in this arena is limitless. Who knows what the future will bring?

Changes and challenges

The Internet of Things: The McKinsey Global Institute has forecast that the Internet of Things will have a financial impact running to a trillion dollars by 2025. This will impact several industries such as manufacturing and the energy industry, as well as healthcare. With regard to the latter, IoT devices are used for data and analysis collection in medical research, tracking electronic health records, and monitoring patients.  

Artificial Intelligence: The adoption of AI is gaining momentum and many companies across a spectrum of industries are expected to make major investments; AI, augmented/virtual reality, blockchain, drones, IoT, robotics, 3D printing and autonomous vehicles, are all relatively new developments set to see massive returns in revenue.

  • Even with the ups and downs of the market, there is no doubt the technology sector is a high-performing choice. Aggressive growth in consumer spending in technology products has driven stock prices to new highs. The push for digitisation has resulted in aggressive technology business growth and consumer adoption and retention.
  • Market volatility may be a reason to continually re-evaluate tech positioning, and investors will need to appreciate that the sector may come with some radical market changes. If investors choose highly volatile companies, they need the tenacity to ride out those periods.
  • The overarching theme for technology investors in the months ahead: keep an eye open for new trends. There are always new innovators – and the big players like Apple and Amazon, Netflix and Facebook may be soon challenged by new champions. Keeping abreast of the momentum of changes and trends in this sector, is pivotal to successful investment in the long term.

Foster Wealth: steering business, driving wealth

At Foster Wealth innovation, agility and in-depth market acumen are our daily fare. The volatility of markets, unexpected events and fluctuating values continually take us to new levels of interest and possibility. Constant re-assessment and evaluation are how we keep ahead of the curve – but our hard work, professionalism, attention to detail and personal attention are the hallmarks of our business and will never change.   

Find out more about us at: www.fosterwealth.co.za