From investor to customer the technology industry is just plain exciting as possibilities unfold into realities. A few years ago, for the average consumer, perhaps of a certain age and who hasn’t attend a CES conference, driverless cars remained an outside idea, akin to sending passengers to the moon. You know it to be a distinct possibility but perhaps 10 to 20 years from now tops.
Now driverless cars as an idea is ubiquitous and almost feels like yesterday. Just last year, Uber dropped the idea of flying taxis it is working with NASA to develop. And, again for those of a certain age, it feels like an episode of the Jetsons has come to life.
Currently, the tech sector feels like one of limitless potential but is this just a view from inside a bubble?
Bubbles and froth?
And, the sector has had an amazing run thanks to investors banking on its potential and ability to deliver. Nasdaq, the tech-laden index, returned 27.24% against the broader S&P index 22.49%. Technology, of course, is part of the long-running bull market.
In the current environment, quite a few sectors are benefitting from a triple boost: the promise of windfalls from tax reform (although techs less so); global economic growth and low inflation. Bank of America Merrill Lynch Global Research says its US equity strategy for 2018 is one that is positioning for euphoria.
BoAML’s view is to buy momentum and growth and that means a sector preference for technology and going overweight. Technology, it says, is the most globally exposed sector where growth remains strong. In its research note, BofAML said, “Technology is expected to win on momentum, despite lofty valuations and bubble-like behaviour.” The tech sector is expensive as a result and those bubbles are making froth.
The growth in technology is about both the consumer and businesses. Opportunities are present as every sector is looking at ways technology to transform their businesses.
Tech companies are seeing their products consumed in entirely different ways. In 2017, the new technologies highlighted included robotics, artificial intelligence (AI), augmented reality and 3-D printing.
Watch Paul Sallomi, Deloitte & Touche’s Global Technology, Media & Telecommunications industry leader talk about opportunities for growth in 2017. As Sallomi explains there are very few companies untouched by the digital revolution.
Big data are achieving expanded capabilities through cognitive technologies such as machine learning and speech and pattern recognition embedded in software applications. Voice controls like Alexa, Siri or Google’s assistant won’t appear just at home but also may be appearing in a device (headphones, smartphones, televisions or smartphone gadgets) in the near future.
Blockchain technology is an inescapable topic because of the high profile and incredible rise of digital currencies like Bitcoin, but the technology is already making groundbreaking change to the financial services industry.
So while the technology remains cutting edge and points to becoming more mainstream such as Sony’s incredibly interactive artificial intelligence dog Aibo promises to deepen its bond with its owner over time and with an over $1700 price tag it's the least it can do.
Or, LG’s "talking" washing machine which could bring comfort if you already have a habit of speaking to your white goods that it will talk back.
Watch the highlights from the CES conference 2018 here.