Market Commentary
Getting used to it. We are at the halfway point of 2018 and the Dow Industrials and S&P 500 are within 2% of the start of the year in an ongoing trading range that could still have months to run. When you consider all that has happened in the world so far this year, it is amazing that the major indexes are close to unchanged for the year, which has defied most earlier expectations. The news has resulted in a market that has been more volatile, but the net effect has been much more neutral. Last year’s strong performance by the markets, combined with higher earnings this year, resulted in many forecasts for continued strength. But instead, the markets have been in more of a sideways consolidation period as earnings catch up to the higher stock levels. Overall, the range has been about 8% wide for the past five months, with the current short-term trend looking like it could ‘potentially’ test the lower end of the range again soon.
Artificial Intelligence – How will it change our world?
The growing integration of the broad range of robotics in the future is nothing to fear, and should be embraced as yet another technological leap that can save companies money, improve workplace safety, and enhance people’s lives.
In what form will AI arrive?
Personal preferences:
Hardly any occurrences in our digital lives happen by chance nowadays. The shows we watch on Netflix, the recommendations on Amazon, and the top items on Google search results are all strategically placed there through intelligence gathered about each individual and then processed by AI and big data. Machines seem to know about our needs and wants better than ourselves.
Transportation transformation:
Autonomous driving is fast becoming a reality. There is increasing investment from a wide array of companies and self-driving cars are being tested on public roads. These powerful machines combine optical sensors and computerized communication to analyze and react to road and traffic conditions, optimize driving directions, and hopefully, over time, provide a safe journey. Major players have developed highly functional software platforms, such as Baidu’s Apollo, Alphabet’s Waymo, and Nvidia’s Nvidia Drive. Automakers are continuously churning out generation after generation of autonomous vehicle prototypes, and self-driving cars and trucks will continue to enter the market in the near future.
Productivity boost:
In offices and factories, AI has made significant contributions to enhance efficiency and reduce costs. Manufacturers are seeing a significant productivity boost from process optimization powered by AI. Applications include supply chain and demand management, output optimization, and predictive maintenance. Enterprise data solutions provided by tech giants help companies streamline their processes and improve cost efficiency. Health care remains an area where technology hasn’t impacted productivity in the same way as other industries, and it should benefit from AI and robotics in the future via saving both patients’ and doctors’ time, more accurate diagnosis of patients, as well as driving an evolution of the doctor/patient relationship, which is being seen with virtual health care offerings.
Connectivity is the future:
In the foreseeable future, more and more “things” that we use in our daily lives, physical or virtual, will connect to the internet. These will join the network of objects, devices, and software platforms that forms the Internet of Things (IoT), which enables connected objects to exchange data. The IoT is likely to not only support smart homes, but smart companies and smart cities as well. This is occurring because of the expansive broadband coverage compared to several years ago, the declining cost of broadband, and the increasing number of connectable devices.
Ready or not, change is coming
Predictions can be wildly inaccurate at these early stages of change, so robotics’ ultimate penetration into our lives and the changes it may bring are still far from known. Looking back at how past industrial revolutions played out, we are optimistic that new jobs will be created in tandem with productivity growth as a result of advances in robotics. The Wall Street Journal projects AI to displace workers from 1.8 million jobs while generating 2.3 million new jobs by 2020. Robotics technology and AI are bringing exponential changes to how we live, work, and interact with the rest of the world. Change, particularly technological change, remains a constant in our lives, so I think it’s prudent to embrace and understand it.
Who is involved in the robotics theme?
The following is a list of companies that have exposure to robotics. Industrials, autonomous driving, health care, and consumer devices are the main areas that have significantly embraced and adopted robotic technologies.
Artificial Intelligence:
Alphabet Inc. (GOOGL)
Amazon.com Inc. (AMZN)
Apple Inc. (AAPL)
Baidu Inc. (BIDU)
IBM (IBM) Hardware & software
Intel Corp. (INTC)
Nvidia Corp. (NVDA) IBM (IBM)
Tencent Holdings Ltd. (TCEHY)
Autonomous Driving:
Alphabet Inc. (GOOGL)
Analog Devices Inc. (ADI)
Aptiv plc (APTV)
Baidu Inc. (BIDU)
Deere & Co (DE)
General Motors Co. (GM)
Intel Corp. (INTC)
Tencent Holdings Ltd. (TCEHY)
Tesla Inc. (TSLA)
Nvidia Corp. (NVDA) Industrials
WABCO Holdings Inc. (WBC)
Consumer Devices:
Alphabet Inc. (GOOGL)
Amazon.com Inc. (AMZN)
Apple Inc. (AAPL)
Samsung Electronics (SSNLF)
Hardware & Software:
Analog Devices Inc. (ADI)
IBM (IBM)
Intel Corp. (INTC)
Microchip Tech Inc. (MCHP)
Nvidia Corp. (NVDA)
Siemens AG (SIEGY)
Health Care:
Intuitive Surgical Inc. (ISRG)
Johnson & Johnson (JNJ)
Siemens AG (SIEGY)
Stryker Corp. (SYK)
TransEnterix Inc. (TRXC)
Zimmer Biomet Holdings Inc. (ZBH)
Industrials:
ABB Ltd. (ABB)
FANUC Ltd. (FANUY)
Rockwell Automation Inc. (ROK)
Have a great long weekend.
Tim