Prime Developments Throughout Robotics, AI & Well being Tech for 2023

As we transfer into 2023 and past, we count on to see main technological tendencies proceed to shift the best way we expertise and work together with the world. The digitization of the financial system is continuing at a brisk tempo, and enterprise leaders world wide at the moment are taking full benefit of the more and more broad set of automation applied sciences obtainable, from improvements in software program and the cloud to developments in robotics and machine studying. 

We imagine these tendencies will present funding alternatives associated to 5 key themes, every a possible secular beneficiary, that will assist traders reap the benefits of cyclical market weaknesses.

Prime 5 Expertise Developments for Traders to Watch in 2023:

 

ROBO International at the moment provides three progressive index portfolios to permit traders to capitalize on these 2023 know-how tendencies, together with our Robotics & Automation Index (ROBO), Healthcare Expertise & Innovation Index (HTEC), and Synthetic Intelligence Index (THNQ). To study extra, go to our web site at www.roboglobal.com.

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Webinar Transcript:

Lauren Hein:

Hello all people. Thanks for becoming a member of us this morning for our Disruptive Developments to Watch in 2023 dialog. I am Lauren Hein. I am the pinnacle of Advisor Relations at ROBO International. I am right here with our analysis group, our esteemed trade consultants, Jeremie Capron, my director of analysis, Lisa Chai, our senior analysis analyst, and Zeno Mercer, our analysis analyst. And we’ll cowl the applied sciences that actually excite us going into the brand new 12 months. First issues first. You may obtain this report at roboglobal.com, and they need to have been emailed out to you at registration as properly. So they need to be sitting in your inbox if you would like to comply with together with our dialog. Our 5 tendencies to look at this 12 months within the order that we’ll talk about them right this moment. Primary, liquid biopsy will allow early-stage most cancers detection. Quantity two, autonomy will redefine mobility. Quantity three, now coming into a world of related care. 4, AR/VR will break limitations between the bodily and digital worlds. And our remaining thrilling pattern for 2023 is reshoring will drive an automation revolution. So the primary query I assume is open to all people, then we’ll begin with the liquid biopsy dialog with Zeno. How did you guys arrive at these 5 tendencies for the 12 months?

 

Jeremie Capron:

Nicely look, at ROBO we predict robotics, AI, and healthcare applied sciences are a set of applied sciences that may be utilized to so many industries, very very similar to the web over the previous 20 years, and in the previous couple of years we hit an inflection level and we have seen machine intelligence considerably widen the vary of potential purposes. So a decade in the past was basically about robots automating the manufacturing of automobiles. However in the previous couple of years we noticed robots popping out of the manufacturing facility and discovering large purposes in so many areas, warehouses, logistics, we’ve got flying robots, we’ve got robots driving automobiles and vehicles, we’ve got surgical robots, we’ve got automated programs throughout us, in labs, in transportation. So there have been so many areas to choose from. And so we slender it all the way down to these 5 tendencies as a result of we imagine they are going to have an vital impression on funding methods over the following few years.

 

Lauren Hein:

And I did have a look at the 2022 tendencies report, and there is some continuity there from what you guys had been enthusiastic about final 12 months for positive. Zeno, I’ll begin with you. Speak to us about liquid biopsies early-stage most cancers detection, and stroll us by this primary section of the report.

 

Zeno Mercer:

Proper. So one of many first pattern that we highlighted for 2023 is the idea often called liquid biopsy, which is actually the power to detect most cancers within the blood, the objective being to detect it earlier and fewer value invasiveness to forestall the unfold from stage one to stage two, stage three, stage 4 most cancers, and in the end present an outlet, a capability for extra individuals to get therapy for most cancers. So I feel one factor to consider right here is first, what’s liquid biopsy? Basically it is detecting tumor DNA within the blood. This builds upon years and years of know-how development, each {hardware} and software program, that has allowed corporations to exit and market merchandise, get FDA approval, actually, after which get insurance coverage reimbursement from offering these providers as a result of they validated the medical efficacy of this. However in the end, liquid biopsy is a know-how that we actually imagine will take off in 2023 with new approvals and elevated uptake of individuals using this going ahead.

 

Lauren Hein:

Do you might have any particular corporations which are inside any of our indexes that excite you on this know-how? What would you say is perhaps the publicity inside any of our indexes by proportion foundation? Give us some recommendation right here.

 

Zeno Mercer:

Okay. So I will begin along with your second query right here. So our publicity and the way we have a look at the subsectors, if you’ll, that we’ve got related to liquid biopsy. It could be remiss to speak about liquid biopsy with out speaking in regards to the Genomic house. And we’ve got about 11% uncovered to the Genomic house by corporations equivalent to Illumina. So Illumina actually is a pioneer of DNA sequencing, which is really enabling the liquid biopsy house to behave and work. So Illumina additionally pioneered one of many first… They weren’t actually the primary to market with a liquid biopsy, however they’d an fascinating story the place basically they had been doing non-invasive prenatal testing in 2013 on ladies who’re pregnant, to detect if their kids, their infants, they had been nonetheless within the womb, had any genetic ailments, NIPT, non invasive prenatal testing. What they discovered although was that they really detected most cancers tumor DNA within the samples they obtained.

And so they realized that, hey, we’re discovering most cancers in ladies and a few of these individuals won’t know they’ve it. So they really went out and reached out to all of the people who had submitted samples, they usually really found that sure, many certainly had no indication, no signs, no analysis, something. And so what they realized is that, hey, we’re onto one thing right here and we will really detect most cancers in blood like that. Now, they don’t seem to be the one ones who’ve executed this. In actual fact, one other firm referred to as Guardant Well being had really already been slightly additional alongside in progressing their Guardant 360 system or assay, actually, which may detect most cancers early as properly. So these are two totally different corporations that we’ve got. There’s additionally a 3rd, Vercyte which has numerous merchandise which are detecting particular cancers equivalent to lung most cancers, thyroid most cancers, and prostate most cancers, which are already out there right this moment and obtainable to individuals to be used and getting for utilization.

So docs are prescribing this if they’ve any signs or if they are a excessive danger inhabitants. Again to Grail although, which is the corporate that Illumina spun out. Basically Grail has a pan most cancers check that may detect over 50 various kinds of cancers. And that is obtainable to most of the people now, but it surely’s at the moment about $850 a check. And it isn’t lined by insurance coverage. So that’s of their pipeline to attempt to get lined within the subsequent a number of years. However, for instance, you thought you may need most cancers or it was uncertain a health care provider may really prescribe this check. So there could be an out-of-pocket pay for $850 at the moment. But when you concentrate on how a lot inexpensive that may be than ready years to detect and discover a later stage most cancers, you may actually begin to see the profit right here of how early most cancers detection, at that baseline worth, if it will get lined, could possibly be very impactful for the healthcare ecosystem and people’ lives.

 

Lauren Hein:

Is there a world that you just envision within the close to future the place we’ll go in for routine blood work and begin performing some commonplace most cancers screenings at that time?

 

Zeno Mercer:

Sure. So sooner or later, liquid biopsy will most likely be part of yearly or bi-annual screening for individuals. It may rely, perhaps there is a particular most cancers that’s greater danger for a person, and if that check had been cheaper, perhaps that may be the check that may be opted in for. However in the end, as the price of sequencing goes down, as this know-how improves and scales out they usually can have improved economies of scale from the price construction, you may undoubtedly begin to see liquid biopsy, extra of an annual screening, and most cancers detection charges would technically go up, however the stage at which most cancers is detected will go down, which might enhance the survival charges of many, many individuals. You could have disparities of 5, 10, 20x survival charges for a lot of cancers, and lots of of these, which do not have a correct or established protocol for detection. So that is actually sport altering know-how that we imagine may have fast adoption ramping up within the subsequent a number of years.

 

Lauren Hein:

So to tie this again to our HTEC index, primarily these corporations you think about within the genomic subsector, are there different secondary subsectors which are touching this?

 

Zeno Mercer:

Yeah, so whereas I began with Genomics because the core, we even have the Diagnostic subsector, which is 15% of our index and the Course of Automation. So if you concentrate on how the liquid biopsy course of works, you might have corporations which are constructing particular assays that may go and both gather or detect the most cancers itself, however there’s additionally Lab Course of Automation. It needs to be collected, it needs to be securely transported again to a lab. It isn’t being executed on web site, usually talking. After which one other secondary market that we even have publicity to here’s a Precision Drugs aspect. So whereas earlier most cancers detection is a good factor and might present higher outcomes, on the opposite finish of the spectrum the precise therapy protocols in place are being drastically enhanced by the event of precision drugs with CAR T therapies, CAR NK therapies and different precision drugs that may goal the most cancers with out extra of a shock and method like chemotherapy and different strategies.

So we’re actually enthusiastic about seeing early detection, met with extra exact drugs, having an enabling impact at lowering most cancers mortality charges and the general value and burden of most cancers from each an financial and alternative value for individuals.

 

Lauren Hein:

Superior. Zeno, undoubtedly one thing that touches all people. So thanks a lot for that outlook. Jeremie, I’ll pivot over to you. Let’s speak about autonomy redefining mobility. And truly that is an extension of two of the themes from final 12 months’s report that robots are coming to save lots of the provision chain and {that a} manufacturing facility automation tremendous cycle is right here. So perhaps an excellent place to begin is speaking in regards to the greatest progress alternatives in mobility and related autos within the subsequent upcoming 12 months.

 

Jeremie Capron:

Certain. Nicely look right here, the important thing phrase is autonomy, and autonomy is the following step of improvement for machines. And so till not too long ago, automation was actually about programming machines and computer systems to do repetitive issues in a really systematic approach, very quick and precisely. Now, with the appearance of machine intelligence, we’re in a position to push it to the following stage, which is autonomy and programs that may make choices primarily based on their atmosphere and the way it modifications. And in order that’s been enabled by large progress by way of computing energy, by way of gathering robust information units and operating machine studying onto them. After which by way of actuation and the way these machines are in a position to react actually quick. So in fact we’re all speaking about autonomous automobiles, and that is the holy grail on the market. And admittedly talking, we’re getting shut. We have seen the beginning of the primary ROBO taxi providers, industrial providers, being launched in the US during the last couple of years, in order that’s coming actually quick.

However we predict that is simply the tip of the iceberg. And in actuality, autonomous mobility is gaining numerous traction in areas that you could be not concentrate on. And one of the vital promising areas, in our view, is absolutely within the warehouse. So it goes again to what you had been saying decrease and about warehouse automation. In actual fact, there are tons of of hundreds of autonomous cellular robots working right this moment in distribution facilities for e-commerce and in different areas of the provision chain. We expect that is most likely the faster-growing and most fun piece of autonomous mobility from an investor’s perspective right this moment. There are numerous corporations concerned on this space, lots of that are within the ROBO Index.

 

Lauren Hein:

I need to ask you subsequent in regards to the firm particularly within the ROBO Index, however do you envision a world sooner or later the place warehouses are totally autonomous with none people current there in any respect? Perhaps not in 2023, however additional out?

 

Jeremie Capron:

Yeah, that is definitely the route we’re taking. And if you concentrate on how manufacturing has grow to be very a lot automated areas like automotive and shopper electronics and issues like that, these producers are tending in the direction of, what we name, the sunshine out manufacturing facility the place you principally can flip off the lights as a result of there is not any one in there. And we’re not fairly there but right this moment. However I feel the objective for provide chains and warehouses and distribution facilities may be very comparable. However right this moment we’re so removed from that. In actual fact, right here in the US, we’ve got greater than 17,000 warehouses, and a low single-digit proportion of these are automated right this moment. So there is a great distance by way of adopting all types of automation tools first after which transferring to autonomous cellular robots, and in the end the lights out the warehouse.

Lauren Hein:

Really easy segue to corporations which are going to profit as we do extra autonomous programs with logistics and manufacturing automation. So what are a few of your favourite corporations? I am assuming most of those are within the ROBO Index particularly.

 

Jeremie Capron:

Sure. We expect provide chain optimization and warehouse automation and real-time stock administration are the actual focus right here, and you will find within the ROBO Index, many corporations concerned in warehouse and logistics automation. You have received all types of various enterprise fashions. You have received corporations like Zebra Applied sciences right here within the US that do real-time asset monitoring, the monitoring, and tracing of elements of parcels in a provide chain. You may discover corporations like KION in Germany which does logistics automation options for the massive gamers, or Daifuku in Japan, that is the world chief in materials dealing with tools. You may discover software program companies like Manhattan Associates, that is a US-based software program firm that does warehouse administration programs, or I can consider Auto Retailer that is primarily based in Scandinavia and does very compact automated storage programs. That is gained numerous traction and that went public final 12 months.

 

Lauren Hein:

I’ll drag you again actually rapidly to autonomous autos. Perhaps let’s first cease with electrical autos. Do you see a transition within the close to future until all of the automobiles on the roads might be electrical after which the following step might be autonomous autos? Then I need to speak about corporations which are going to profit from progress in these areas, particularly.

 

Jeremie Capron:

Yeah, we definitely suppose that electrical autos supply numerous benefits over conventional combustion engine-based autos. And the advantages are so huge that the market goes to shift naturally towards that. The massive query mark is over the tempo of this transition, and we will debate round that, however the pattern may be very clear and really highly effective. And if you happen to have a look at investments being made by OEMs, we have seen a dramatic shift over the previous two to 3 years by way of allocating to EVs. In order that pattern is firmly in place. And it is vital as a result of an electrical automotive is actually a a lot less complicated automotive than a combustion engine-based automotive. There are fewer transferring components, the upkeep is less complicated, and the design is less complicated, however you want very important investments by way of manufacturing property to ship these.

When it comes to the beneficiaries of the extra electrical and good automobiles, we see quite a bit across the semiconductor trade and the businesses that ship the chips which are used for the computing aspect or for the pc imaginative and prescient aspect. And in ROBO, you may discover corporations like Ambarella that does pc imaginative and prescient on a chip, and whose know-how is embedded within the subsequent era of autos, otherwise you’ll discover corporations like Qualcomm and Nvidia, and Hexagon additionally in Europe.

 

Lauren Hein:

Okay. One thing within the report that we have not talked about but is drones, drone know-how, particularly for a last-mile supply answer. Is that one thing you suppose is lifelike? Is that one thing we predict is inexpensive? And do we’ve got any drone publicity inside ROBO?

 

Jeremie Capron:

Sure. Drones, we regard as flying robots, and we predict there’s an enormous market potential for such a know-how. In the present day it is nonetheless extra of a distinct segment, however all the massive gamers are experimenting with drones, from supply purposes to stock administration indoors. We expect, proper now, on the industrial aspect, there’s an amazing alternative to make use of drones for monitoring and surveillance, and surveying outside. It may be public infrastructure, it may be energy utilities, it may be utilized in mining and development, and agriculture. And that is the place autonomous drones are gaining traction proper now. So by way of publicity inside ROBO, it is as soon as once more going to be on the chip aspect, and firms like Nvidia and Analog Units are concerned there, Ambarella and Qualcomm or key suppliers of chips which are being utilized in drones, and particularly autonomous drones.

 

Lauren Hein:

Is the FAA on board with this, and are we really doing any drone supply within the US at this level?

 

Jeremie Capron:

This stays all experimental at this stage, particularly within the US the place we’ve got robust regulation of airspace. However we began to see some corporations get hold of authorization to function autonomous drones past the visible line of sight, which implies that you do not want a pilot on the bottom with a line of sight onto the drone. And in order that’s a major milestone that we have simply crossed, and so that you’re most likely going to see much more deployments going ahead.

 

Lauren Hein:

Very cool. All proper. Thanks. Jeremie. We will come again to you in a bit, however first, Lisa, let’s speak about how we’re coming into a world of well-connected care. We will speak quite a bit in regards to the web of issues on this part, so perhaps additionally speak, outline the web of issues earlier than we actually get going, and speak about healthcare purposes for the IoT.

 

Lisa Chai:

Oh, undoubtedly. I feel primarily what you are actually seeing is that the healthcare trade is absolutely going by this main transformation pushed by rising prices, doctor burnout, lack of nurses, and sufferers undoubtedly demanding simply higher well being care. Who likes their healthcare course of and their plans? So we’re actually seeing developments proper now in healthcare know-how. And we predict that subsequent 12 months is known as a robust 12 months for areas like customized drugs and areas like IoT that you just talked about. So medical IOT, we’re tremendous bullish. We expect proper now these medical gadgets which are wearable and transportable are actually wanted. They’re non-invasive, and it gives real-time monitoring, and bettering affected person expertise round entry to healthcare information, and join them to healthcare suppliers. So we’re actually bullish as a know-how that has actually improved by higher cloud applied sciences and higher wifi connectivity and adoption of AI. AI is lastly right here in healthcare. So we now have gadgets that you would be able to put on, which are wearable sensors, that observe real-time well being care information. So physicians can control you as you permit the hospital or the physician’s workplace.

 

Lauren Hein:

Very a lot listening to an extension of final 12 months’s theme that information analytics and AI are going to drive efficiencies in well being care. It appears like that was fairly spot-on final 12 months. Speak to me slightly bit about corporations throughout the well being tech index. I am assuming there’s additionally some crossover with the unreal intelligence index, however corporations which are actually integral to this house, to this creating know-how.

 

Lisa Chai:

Sure. Inside the healthcare know-how innovation technique, we’ve got two subsectors the place that actually seize this publicity. One space is in Medical Devices. So these are corporations that not simply present surgical instruments, but additionally the IoT gadgets. After which the opposite subsector could be Telehealth. And these two subsectors actually seize this bullish pattern that we’ll see in 2023 with an incredible quantity of progress behind it. A few of the index members which are actually main this transformation are corporations like Dexcom. Dexcom has developed a transmitter system that you just put on that measures and sends real-time glucose information wirelessly to the doctor. So that you need not have this painful fingerprint that is very invasive. They’ve actually modified the sport.

Index members like iRhythm, Abbot, and Medtronic, are additionally corporations which have actually led the revolution transformation round cardiac monitoring gadgets. So whether or not it is utilizing cardiac screens or sure sorts of pacemakers, you are undoubtedly seeing the cardiovascular market actually reworking, the place it is non-invasive, they’re transportable, and also you’re in a position to talk along with your physicians, they usually may control you as you permit the hospital for surgical procedures. So these are actually game-changing in our minds, and we predict that HTEC technique actually captures many of those corporations which are actually reworking healthcare.

 

Lauren Hein:

So I am listening to that these appear to be proper now utilized in extra post-care aftercare affected person follow-up purposes. Is there a world the place we use extra medical IoT in diagnostics, or do you might have any ideas about that?

 

Lisa Chai:

Sure, I feel you are going to see each of those wearables that offer you biosensing applied sciences. So it may measure your heartbeat and alert and offer you detection on whether or not you might be about to have some healthcare points. So that you’re undoubtedly seeing a world converging of that diagnostic giving that real-time alert. After which the AI actually bettering and serving to the analytics aspect. And now as a result of the cloud has actually improved, and the wifi connectivity has actually improved, we’re in a position to get the info actually rapidly and get the medical assist that you really want. So you bought the diagnostic aspect and clearly on the post-surgical aspect, and that is crucial as a result of that actually means that you can have much less hospital keep, and you’re going to have a greater affected person consequence. And in addition the insurers and healthcare corporations are additionally going to see decrease bills for our sufferers and people.

 

Lauren Hein:

I simply need to affirm additionally for everybody, the applied sciences for what you’ve got spoken about, medical IoT gadgets particularly, usually are not one thing we’re discovering on our smartphones right this moment, not one thing that is simply mass-produced at this level with the rings or a watch. They’re extra specialised healthcare gadgets.

 

Lisa Chai:

Sure, undoubtedly. I feel what you are going to see going ahead, we’ll see extra options and applied sciences and innovation round patches, wearable patches that might launch a sure kind of remedy, and that is going to connect with perhaps your smartwatch going ahead, or additionally along with your diagnostic answer. So we’ll have a world the place we’ll have all this information that is going to tie in and combine it, and it will ship that real-time alert to your medical suppliers.

 

Lauren Hein:

After which lastly, once more, to tie it again to the HTEC Index, what subsector do you suppose this usually falls into? Perhaps it is a few subsectors. We have talked about a few corporations already particularly, however the place do you classify that inside well being tech?

 

Lisa Chai:

You’ll discover this within the Medical Instrument subsector, which is considered one of our greatest subsectors throughout the HTEC technique. You’ll additionally see a few of these corporations have the presence wanted for Telehealth. And Telehealth, we count on that subsector to develop over time as we see all this innovation occurring, as we get extra information and analyze this information, after which additionally be capable of allow a few of these customized therapies and drugs to the people and sufferers.

 

Lauren Hein:

And we’re seeing some bleed over into the AI index as properly.

 

Lisa Chai:

Sure, precisely. So throughout the THNQ Index, we’ve got, as you understand, an in depth quantity of AI scoring by way of purity of AI income. So many of those corporations which have the healthcare publicity, they might not have the AI income publicity, however we’ve got a very good listing proper now the place we’re actually being thorough, by way of what corporations will make it to the index. However at the moment, we’ve got a number of corporations which have healthcare publicity, corporations like Butterfly, that is received robust AI revenues.

 

Lauren Hein:

Very good. Zeno, we’ll pivot to you, if that is okay. Let’s speak about breaking limitations between the bodily and digital worlds. Augmented actuality in digital actuality. Perhaps begin with some definitions there, after which let’s speak by why you suppose that is an thrilling theme for 2023.

 

Zeno Mercer:

Proper. So clearly, to take a step again right here, it was an enormous 12 months final 12 months when Meta rebranded Meta as a part of the metaverse. So I feel simply throw that on the market. After which considering ahead, we have augmented actuality and digital actuality. So augmented actuality could be an overlay know-how or visible display, there are a variety of various kinds of modalities this might happen, perhaps in your dashboard, contact lenses or glasses, or a headset, however basically it is augmenting actuality. It is a digital overlay. It could possibly be audio, it could possibly be visible, however in the end it is an understanding, a digital understanding of what is occurring round you and the power for that to supply insights which are custom-made to you. Digital actuality could be extra in a siloed sense of simply being in its personal digital world, so probably not having something to do with what’s round you.

And that might have many alternative purposes, however in the end it does not require as a lot, there’s numerous processing to create these digital worlds, but it surely does not require actual time processing of the world round you. Proper now you are seeing most likely one of many larger Christmas vacation reward objects could be virtuality headsets from Fb or Meta and from Microsoft. And principally for gaming proper now. And so proper now, I feel lots of people consider AR/VR as simply the proxy for a brand new type of gaming, however there’s actually much more to it.

 

Lauren Hein:

Do you need to take a stab at defining the metaverse?

 

Zeno Mercer:

Certain. I feel it is a phrase that goes approach past the simplified single phrase, metaverse, that we use. However basically there are two totally different types of the metaverse. There may be the augmented actuality metaverse, which really incorporates and understands the actual world, that is physics, chemistry, what merchandise and objects are and the classification of these objects, and the way they work together with the world. After which there’s the pure metaverse kind that perhaps Meta and Zuckerberg would think about, which is simply residing and interacting purely on this digital world, which I feel is horrifying to some people who we’ll be this matrix drone society. But when you concentrate on how we already talk and have developed this society. Folks have been glued the TVs and PCs, cellphones, and now we have smartwatches. They’re actually simply methods of portray, speaking and sharing, and having totally different experiences, throughout totally different life phases and totally different types of leisure or studying.

So I feel if you happen to’re wanting ahead, beginning subsequent 12 months, you are actually going to begin to see extra information bulletins of know-how that might be approaching board. Even not too long ago, there have been rumors going round that Apple’s engaged on glasses, augmented actuality glasses, which we may most likely guess could be slightly bit higher than Alphabet’s Google glasses that had been launched, at this level, over a decade in the past now. So I feel it is actually not hit individuals but that in a decade from now, individuals won’t be carrying cell telephones anymore. We will have a unique tech modality that is actually introduced in by the infrastructure and software program and many alternative industries colliding to create a extra seamless expertise that higher integrates into our lives. The typical grownup Google searches three to 5 occasions a day. That data could possibly be extra real-time and synced to your each day life, and actually profit individuals, each children, and lecturers, in addition to the getting older inhabitants on navigate the world and get assist in real-time. So we’re actually excited in regards to the optimistic advantages that may happen from the utilization and uptick of this house.

 

Lauren Hein:

So the tendencies report does a very nice job of laying out numerous purposes for augmented and digital actuality applied sciences. It feels slightly bit right this moment perhaps we predict that it is all simply gaming, after which we think about ourselves residing in a very digital world sooner or later, however there may be definitely a spectrum. Do you need to speak about some other purposes for this know-how which are relevant extra right this moment?

 

Zeno Mercer:

Yeah, positive. So I feel one of many extra direct segues from gaming could be schooling. If you concentrate on how every individual learns, they go to a classroom, in the event that they’re fortunate, they get tutoring, in the event that they’re even luckier, they’ve entry to know-how and issues that may perceive how they study, what they know, the place they progress. And that is each from a testing aspect and a studying aspect. So I feel you may see throughout quite a few disciplines, arithmetic, physics, and historical past, there are going to be increasingly more methods of personalizing this schooling to allow them to perceive how every particular person learns. This could additionally increase by sports activities and different bodily studying equivalent to golf or what have you ever, the place it may well perceive the way you’re stroking. You have received, as we lined earlier about wearables, you may see wearables additionally apply to this augmented and digital actuality the place it may well actually offer you visible and voice cues which are automated that can assist you discover ways to do issues higher, perhaps even cooking.

So I actually like schooling, studying, and training. There’s additionally collaboration. Proper now we’re on this name, we’re all somewhere else, however technically we’re right here collectively proper now, and the viewers right here, even when they’re right here watching this later, they’re right here on this second. Sooner or later, this collaboration, every considered one of us is taking a look at perhaps a TV display or a monitor and look right into a digicam. Sooner or later, it will be even higher. You may have extra customized dashboards, extra data might be popping up in your display that immediate you and offer you visible cues. And so even working collectively, every individual will be capable of work in their very own fashion, however every individual on the opposite aspect of it’ll even have their very own distinctive angle with out impacting the others’ expertise. So this customized buyer expertise will actually enhance organizational collaboration.

After which in the actual world, going again into the augmented actuality aspect of issues, take into consideration simply navigating a metropolis or a brand new expertise. Perhaps you pull out your telephone and determine go on Google Maps. In actuality, you may have this augmented actuality headset. You are able to do this now with Google Maps the place you maintain up your telephone and it may well present you which of them route to go, however you are still not arms free. And I feel that the following step is that this hands-free, seamless integration of know-how that’s designed that can assist you. Let’s hopefully keep away from the Meta world the place it is simply flooded with commercials and it is really helpful know-how that is providing you with the knowledge that you really want and wish in real-time.

 

Lauren Hein:

So this explicit dialog feels very particular to suppose THNQ, the AI index. You may right me if I am fallacious on that, however are there any explicit corporations that you just’re actually enthusiastic about?

 

Zeno Mercer:

Yeah, I feel I will rapidly add one other space you talked about. That is undoubtedly very AI-focused, AI is empowering the know-how to create, perceive, and implement this, the infrastructure and utility aspect. However there is a idea often called digital t win, which is actually recreating, and I alluded to this, but it surely’s recreating the bodily world and digital world. This might even be for the human physique. So suppose healthcare. So there are many purposes already at the moment being developed and deployed, equivalent to navigating surgical, the surgical house of understanding and doing pre-op, customized implants which are made utilizing 3D era software program that matches the person. And so we’re already seeing actual impression from this, it simply hasn’t been referred to as essentially AR/VR, which is extra of how we’d be utilizing it. So some corporations that I am actually enthusiastic about that we’ve got publicity to at ROBO could be, on the infrastructure aspect, none of this is able to be potential with out superior AI semiconductor chips.

So corporations like Nvidia making AI chips. They’ve not too long ago been within the information and a part of international commerce wars about how highly effective these chips are as a result of they actually allow a quick understanding of deep studying and the way issues work. They’re quicker at crunching these numbers. They’re quicker at real-time processing, which is vital for these purposes. I feel it is also vital to notice that Nvidia is not only a {hardware} firm. Additionally they have software program that they are actually diving into deeply. And for example, they’ve not too long ago launched a 3D modeling platform, which basically enables you to kind in textual content and it will offer you 3D mesh modeling that you could possibly really implement within the video games or different experiences. So we’re actually seeing large progress within the AI house and the way it can apply to the totally different subsets of society right here. So there’s semi, the following step could be the networking and different infrastructure that goes into place, like safety.

So for example you might have this AI, you might have this augmented actuality, you might have this. How does all of it join? How does it perceive what you are seeing? It is advisable have sensors and real-time processing. So you’ve got received large information storage. If we’re going principally from a textual content to picture to video to actual time 4D society within the digital, large information scalability is required and networking capabilities. So you’ve got received corporations like Pure Storage and Arista Networks which are actually highly effective performs right here. On the opposite aspect, you are going to have, pc imaginative and prescient for augmented actuality. So corporations like Ambarella, which we have talked about in different tendencies. I feel that is one factor to focus on actual rapidly is that whereas we’re speaking about these tendencies, we attempt to discover corporations which are already highly effective and market leaders and have nice know-how, however they’re really in a position to play into totally different mega tendencies that might see large trillion greenback, 5 trillion greenback markets that aren’t in existence right this moment, actually.

I wished to briefly spotlight that. So we have now Community & Safety. On the safety aspect, we even have cybersecurity. As increasingly more of our interactions are digitized, because the providers that we work together with are automated, our identification and safety are crucial. Again within the day, and I am saying this nearly facetiously, you’ll go to a financial institution in individual, there’d be a safety guard there, and perhaps there is a gold vault. Nicely, now it is extra about defending your digital identification to just be sure you’re the individual accessing it by yourself accord. And that all through the journey of accessing and transmitting information and cash that there is not any third social gathering accessing this information or manipulating it. And so the cybersecurity element with corporations like CloudFlare, Gen Digital, and CrowdStrike, are crucial and can grow to be much more vital as this progresses. I feel it might even be remiss to not speak in regards to the corporations which have already been constructing within the 3D house for a while.

This is able to be corporations like Dassault, Autodesk, and Adobe, who’re principally pioneers and leaders within the digital 3D house. However I feel I will additionally briefly speak about, I’ve talked about Meta on this name, and we really do not maintain Meta. They’re actually a really consumer-focused promoting firm, and that is the core of their income. We’d somewhat maintain Microsoft as a metaverse play, and basically AI play, as a result of we imagine they’re making significantly better strikes as an AI firm within the metaverse play with their partnerships with Open AI for enabling these newer applied sciences to truly be within the arms of people and shoppers in a extra optimistic, impactful approach. So we’ve got Microsoft in our AI (THNQ) index. I feel that covers a lot of the subsectors right here, however I’ve to say that the majority of them not directly will come to play into this house sooner or later in time.

 

Lauren Hein:

All proper. The final query I’ve for you, then we’ll transfer again to Jeremie and speak about reshoring. This explicit part of the tendencies report does have numerous concentrate on enterprise capital investing in these startups during the last 12 months or actually two years perhaps. Do you see our index constituents making acquisitions? Do you see corporations really IPOing into this house that could possibly be potential index constituents? Any kind of tendencies you are waiting for subsequent 12 months?

 

Zeno Mercer:

Sure. So in the end across the startups on this house and metaverses, 3D imaging modeling, all of it comes down to essentially AI. AI is the element that is going to offer these corporations a leg up or benefit in creating and deploying these applied sciences. That is also wanting on the infrastructure performs, the connectivity to permit real-time connections between the gadgets that we’ll be sporting, and the backend cloud infrastructure. When it comes to acquisitions, we’re already seeing M&A within the house throughout safety, and throughout AI. There are numerous startups which are creating this house, however I feel individuals additionally low cost, and perhaps worry on the similar time, what corporations like Nvidia are able to doing. With their current 3D modeling mesh improvement they simply pushed out, which most likely simply knocked numerous startups out of the competitors by itself. So I feel it is vital to have a look at which corporations even have actually defensible tech that might be acquired by these large tech corporations as a result of they are going to look to quickly develop and preserve share because the world switches over to this new paradigm.

 

Lauren Hein:

Which is why market and know-how management are key in our constituents’ funding course of. All proper, Jeremie, let’s speak about reshoring. Reshoring is the ultimate of our themes that we’re taking a look at for 2023. We have talked about semiconductors quite a bit right here right this moment, and we have really had the CHIPS act handed in 2022. That might be reassuring numerous semiconductor manufacturing. However speak usually in regards to the reshoring pattern that you just see for the following 12 months.

 

Jeremie Capron:

Okay. Nicely look, I feel one of the vital vital turning factors within the international macro is in regards to the finish of globalization, and actually a change in that pattern that has peaked during the last 5 years or so. And so began a couple of years in the past with the industrial commerce struggle between the US and China. We had the pandemic. Now we’ve got geopolitics coming to the forefront, and so our view is that the pattern of reshoring goes to achieve traction, and there is more and more clear proof of that. So that you talked about the CHIPS Act, that is one, however a collection of main US insurance policies enacted prior to now few months are actually pointing in the direction of that. And we predict that this pattern will create a serious tailwind for robotics and industrial automation. And it isn’t like automation wants a booster within the present atmosphere, as a result of when you concentrate on the issues we’re going through right this moment, the labor shortages, inflation, and rising prices throughout the board, the one clear reply to that from a enterprise chief’s perspective has been automating.

And so companies have began investing at a a lot quicker tempo, over the previous two years. In actual fact, demand for automation right this moment is at file highs and it is rising, and there is extra demand for robots and automation than suppliers can provide. However along with that, these macro modifications round globalization or the tip of it are going to have a vital impression. That is protectionism, deglobalization, we will name it French shoring or reshoring from China into the upper value areas in Europe. Within the US you might have the getting older of the inhabitants, the restriction of migration, the impression of worldwide local weather change, and cyber warfare, as Zeno simply touched on cyber safety. All of that’s actually resulting in a way more aware effort to fabricate regionally. And robotics automation is the enabler of that, the enabler of aggressive manufacturing. And once more, we’re already spending unprecedented quantities on that. In actual fact, within the second quarter of the 12 months, robotics orders in North America had been up 25%, 12 months on 12 months, and within the first quarter, they had been up 28%. So we’re off to a really, very robust 12 months in 22. We expect that tendencies will proceed into the following few years.

 

Lauren Hein:

Main corporations benefiting from that pattern? After which the following query I’ll ask you, are any particular industries you actually see leaning into reshoring?

 

Jeremie Capron:

Yeah, so the beneficiaries are a number of the standard suspects, just like the main robotics corporations like Fanuc, or Yaskawa in Japan, ABB, Sweden, Switzerland. You could have KUKA, additionally one of many high gamers in industrial robots. However you even have the businesses that take part in automation management programs like Rockwell Automation right here within the US, you might have the pc imaginative and prescient gamers like Cognex. Collaborative robots, corporations like Teradyne, that owns Common Robotic. That is received the highest market share in collaborative robots that may work alongside people within the workshop. So these are a number of the apparent one, however there’s a collection of secondary beneficiaries. You concentrate on the actuation, you concentrate on the management system, the software program layer that Zeno additionally talked about.

 

Lauren Hein:

Any particular industries that you just see reshoring? The pattern actually accelerates within the close to time period, clearly, it appears like principally all the things could possibly be impacted, however within the close to time period, perhaps in 2023?

 

Jeremie Capron:

Yeah. So the obvious one to everyone seems to be semiconductors, as a result of we simply had the CHIPS Act handed, and that is earmarking 40, 50 billion {dollars} in the direction of home manufacturing of chips. And instantly following this announcement by the White Home, we have seen main bulletins for Micron and Qualcomm, and Taiwan Semiconductor, all constructing new multi-billion greenback vegetation. And so all of the infrastructure goes to assist this, is coming alongside as properly. Then we had the 2021 Infrastructure Act that is additionally allocating billions of {dollars} to high-tech infrastructure throughout the nation. There is a main push in the direction of electrical autos that we already talked about. And it is vital for traders to know that the manufacturing of electrical autos implies much more automation than conventional automobiles. And that is due to the depth of the usage of robotics to control batteries, for instance, the entire electrical powertrain manufacturing requires extra robots and extra management programs. In order that’s one other main tailwind right here.

 

Lauren Hein:

Yeah, appears like this excessive conviction theme goes to be heavy within the ROBO Index with some crossover once more, into perhaps AI particularly.

 

Jeremie Capron:

Sure, I agree. ROBO has very direct publicity to all we simply talked about, from industrial automation to regulate programs, pc imaginative and prescient, actuation, however there are additionally going to be some AI components to it. So you may discover some extent of publicity within the AI index as properly.

 

Lauren Hein:

Nicely, I need to break as a result of I need to open up the ground to questions. Additionally, I need to remind everybody listening that if you would like to obtain common updates from us, you may join our publication. However man, Jeremie, Zeno, Lisa, thanks for being right here. We will let the viewers take it from right here.