This $3 Trillion Industry Is Just Getting Started - Proffe Invest

This $3 Trillion Industry Is Just Getting Started

By: November 6, 2024

AI is like a baby. It’s a rapidly expanding intelligence that’s trying to figure out how to interpret the world. It can do some simple, helpful things that algorithms have been doing well up to now.

Given the computing power we now have, it’s possible to feed this AI baby superfood, and that baby can grow with no physical limitations aside from companies’ abilities to power the data to feed the AI baby.

Yet AI is only the most recent watershed innovation that the digital economy has delivered to us. The digital economy is changing every aspect of our lives, as the graphic below notes.

Source: IR.com

When evaluating MegaTrends, the single touch point I always come back to is how these trends affect people. Because at the end of the day, all this is about helping people build, live, shop, medicate, move, and everything else with less friction.

Tech for tech’s sake isn’t a winning concept.

Also, something to bear in mind is that New Economy tech is also dependent upon Old Economy machines and labor. Fiber optic broadband doesn’t mean much if you don’t have the equipment to put it in the ground or the towers to move wireless signals.

Here’s just one sector of the digital economy and the kind of growth we’re seeing across the MegaTrend.

Source: UNCTAD

Here’s one aspect of expanding tech that we’ve seen with growth of cryptocurrencies, and it’s likely to be even greater with AI.

Source: UNCTAD

So, the companies that can consume less energy and yield more productivity, the ones that have audiences that are ready to consume their products, and the ones that can simultaneously build for the future today and make money the entire journey are the kinds of companies you want.

Some of my favorites are NVIDIA (NASDAQ: NVDA), Alphabet (NASDAQ: GOOG), Microsoft (NASDAQ: MSFT), ASML (NASDAQ: ASML), Arm Holdings (NASDAQ: ARM), as well as Old Economy companies like Deere (NYSE: DE) and Caterpillar (NYSE: CAT).


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