The US markets have been greatly influenced by the “FAANG” stocks (Facebook, Amazon, Apple, Netflix, and Google.) These four technology companies best represent what is going on in the fast paced world of technology and are a convergence of the internet, digitalization, streaming, and online shopping.

I had an opportunity at a recent RBC Investment Conference to hear Adam Cheyer (founder of SIRI which Apple purchased), Vanguard’s Top Economist Joe Davis, and Scott Galloway from NYU’s School of Business, and perhaps the #1 brand expert in the USA talk about what they see in the future, what’s coming down the pipe, and the “future of work”.
 

I will try to cover as much as I can in this piece, but will barely scratch the surface. Much of what I heard was both fascinating and scary at the same time. I thought I’d share with readers my take on them.

In no particular order:

Adam Cheyer –

• The cofounder of SIRI, perhaps the world’s first true Artificial Intelligence (AI). It was purchased by Apple in 2010 and he then founded VIV which was bought by Samsung.
  • Artificial intelligence takes human ingenuity to solve real life problems BUT it also incorporates a transfer of learning
  • In finance, already seeing it in quantitative models
  • In healthcare, early detection of cancers
  • In genomics, more predictive DNA markers as now multimillion mutation calculations can be done in seconds
  • In agriculture, MIT opened an “ag building food box”, perfecting every variable possible in much less time
  • In retail, replacing the salespeople with online tracking of “preferences”
     
• We are on the precipice of another global paradigm shift which seems to occur every 10 years:
  • • 1985 – The desktop computer/ Windows (by Microsoft)
    • 1995 – The internet  (Winner – Google)
    • 2005 – Mobile Phone (Winner – Apple)
    • 2015 – Personal Assistant
    • 2025 - ?

From RBC’s Karim Hamasni –

• Blockchain today is where the Internet was in 1994 - it will become a viable payment system

From Vanguard’s Joe Davis –

• There is a large Paradox going on:
  • Low inflation yet Full Employment
  • Low Growth but High Valuations
  • Low Volatility but High Uncertainty
  • … and the force of technology can define them all
     
• Last year, a computer simulated program went up against US Top Gun fighter pilot (CI Lee) who has trained the best fighter pilots for the past 20 years – he beat the computer simulator for 20 years until last year… when the computer “shot” him down… in 20 seconds.
   
• A recent Oxford University study says that by 2025, 47% of jobs in the USA are going away, In India 69%, China 77%
   
• It took the Television (TV) 50 years to get to 50 million people, the Radio 13years, the Internet 4 years, the latest Application 30 seconds

From RBC’s Jim Allworth/ Mark Mahaney –

• Google has had 30 consecutive quarters of 20% growth
• Amazon has grown revenues by 25% or more for 15 consecutive years

From Scott Galloway, NYU’s School of Business –

• Amazon opened its first cashier-less supermarket in January in Seattle. It features a row of electronic gates (similar to a Subway Station). When you leave the store, you are billed to an app you’ve downloaded to your phone after you’ve exited. Shoplifting virtually eliminated as well
   
• Global Internet Penetration still growing
  • 50% of the global population
  • 88% of the USA
  • Top 5 Countries 89% - Rest of world 46% (but they represent 90% of the world’s population)
     
• Global Advertising Market
  • Growing 50% a year online, but $100 billion still spent on print advertising globally
  • Facebook and Google capture 60% of all online advertising
     
• Global E-Commerce
  • hit a 10% if all global retail in 2017
  • Amazon now 40% of all US E-Commerce

From Various Analysts and Presentations –

• Video and Image Platforms – Average Social networking is 2 to 5 hrs/day
• Augmented and Virtual Reality are the next platforms
• Surge in Live Streaming – YouTube is now 1 billion hours viewed/day
• Explosion in online marketplaces – think AliBaba in China
• Artificial Intelligence (AI) expected to grow 50% per year the next 10 years
• Cyber Security Attacks are up 63%
• The Trump impact on regulatory environment still uncertain
• Internet earnings will grow 3x the S&P 500 earnings over next 5 years
• Amazon Web Services (AWS) will be bigger than their rival operation and have the world’s top mathematicians and engineers working on it

Obviously, there are a lot more moving parts than are listed above. One thing appears certain: the focus on technological advancements is not slowing down and the sustainable growth continues.

One more interesting thing to note. It’s April 1^st as I wrote this and as of March 30^th’s close, Facebook, Amazon, Google, and Apple’s combined market capitalization was about $2.8 Trillion. And remember that’s after a couple of tough weeks for the tech sector. As of March 30^th’s close, the ENTIRE market capitalization of Canada’s TSX Index was $2.3 Trillion dollars. That’s not April Fools.

 

Vito Finucci, B.COMM, CIM, FCSI

Vice President and Director, Portfolio Manager
 

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