When I was growing up, The Jetsons was one of my favorite TV shows.
Set in 2062, the Jetsons lived in a world of flying cars, video chat and an all-knowing computer called R.U.D.I. (Referential Universal Digital Indexer).
Rosie, the robot maid, took care of all household chores…
George Jetson’s workweek was an hour a day for two days a week…
Fifty-six years after The Jetsons hit the small screen, we are closer to the world of The Jetsons than most of us realize.
Video chat and all-knowing computers are already an integral part of our lives, so much so that we’ve almost become immune to news of robotics and artificial intelligence (AI) developments like driverless cars and self-flying delivery drones.
The Miracle of Exponential Growth
The robotics and AI revolution is driven by one fundamental concept: exponential growth.
Inventor and futurist Ray Kurzweil was the first to popularize the idea that technological change happens at an exponential rate.
Moore’s law – the observation that the integrated circuits in computers double their capacity every 18 months – is the most oft-cited example of exponential change.
The implications of exponential growth are staggering.
Here’s one way to think about it…
If you take 30 linear steps – with an average of 1 yard each – you end up 30 yards away from where you started.
But if you take 30 exponential steps – doubling the size of each step as you move on – you end up an astonishing 610,000 miles away.
That’s more than the distance to the moon and back.
Robotics and AI: An All-Encompassing Revolution
Previous technological revolutions were driven by natural resources, like coal, oil and steel.
The robotics and AI revolution is driven by the marriage of the physical world with data.
That makes robotics and AI all-encompassing.
It’s a revolution that will disrupt almost all current business models – not just, say, energy or transportation, like revolutions of the past.
Consulting firm Accenture estimates that robotics and AI could double the rate of global economic growth by 2035. It expects robotics and AI to increase the rate of labor productivity by 40%.
And just how far along are we in this process?
As it turns out, it’s still in its early days.
As Amazon (Nasdaq: AMZN) CEO Jeff Bezos put it… “It’s the first inning. It might even be the first guys up at bat. We’re on the edge of the golden age [of AI].”
Here’s What Robotics and AI Look Like
When most investors think about robotics and AI, they associatethem with the robots in Star Wars and self-driving cars.
But the robotics and AI revolution is much more.
In fact, it’s hard to find a sector it hasn’t touched.
Here are three examples…
1. Big Data and Logistics
Companies rely more than ever on machine learning to process, trend and analyze massive amounts of data. In 2017, Amazon delivered more than 5 billion Prime items in two days or less. It could only do this with the help of 100,000 robots, factory automation and AI.
Robots and AI are changing the face of healthcare.
Wearable diagnostics, robot-assisted surgeries, and blockchain technology-enabled medical records will reduce costs and deliver a higher level of care to more patients.
Bernard Tyson, CEO of Kaiser Permanente, said, “I don’t think any physician should be practicing without AI assisting in their practice. It’s just impossible (otherwise) to pick up on patterns, to pick up on trends, to really monitor care.”
3. Voice-Assisted AI
Amazon’s voice-activated home assistant, Echo, hit a tipping point in 2017 and now controls 70% of the voice-controlled speaker market in the U.S. Just today, Siri, a rival voice assistant from Apple (Nasdaq: AAPL), helped me produce the first draft of this article, schedule meetings on my calendar and order my weekly groceries.
So when will computer keyboards become relics of the past?
I don’t know. But that day is coming soon.
The Investment Landscape ofthe Robotics and AI Revolution
How the robotics and AI industry will shake out is unclear.
But here are two things to keep in mind…
First, big money in any new sector will be made by a handful of big winners.
Yes, the winners in the sector will share certain common traits.
But it’s almost impossible to pick the winners from the losers ahead of time.
So you need to spread your bets wide to ensure that you are invested in the winning stocks.
That’s why investing in robotics and AI is more like investing in startups as a venture capitalist than buying run-of-the-mill stocks.
Second, robotics and AI companies are truly global.
Unlike today’s high-profile, Silicon Valley-based FAANG stocks – Facebook, Amazon, Apple, Netflix, and Google, now Alphabet Inc. – U.S.-based companies do not dominate the robotics and AI space.
As entrepreneur and Dallas Mavericks owner Mark Cuban has pointed out, the U.S. isn’t home to a single one of the world’s leading robotics companies.
Only 40% of the companies in the ROBO Global Robotics & Automation Index are based in the U.S.
Japan and Germany together account for an additional 35%.
The Good News for Investors…
Despite the breathtaking implications of the robotics and AI revolution, the sector is still in its very early days.
It’s also surprisingly inexpensive.
My favorite way to invest in this revolution is through the ROBO Global Robotics & Automation Index ETF (Nasdaq: ROBO). This ETF trades at only 21 times forward earnings – a real bargain for high-tech growth stocks. And that’s compared with 19 for the S&P 500 Index.
So despite the hype surrounding them, robotics and AI are far from dot-com-style mania.
Savvy investors will make a fortune by getting in on the ground floor of the robotics and AI revolution.
The world of The Jetsons is a lot closer than you think.
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