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

We consider these developments will present funding alternatives associated to 5 key themes, every a possible secular beneficiary, which will assist buyers make the most of cyclical market weaknesses.

High 5 Know-how Traits for Buyers to Watch in 2023:

Liquid Biopsy Will Allow Early-Stage Most cancers Detection	Autonomy Will Redefine Mobility	Now Coming into a World of Linked-Care	AR/VR Will Break Limitations Between the Bodily & Digital Worlds	Reshoring Will Drive an Automation Revolution

ROBO International presently presents three revolutionary index portfolios to permit buyers to capitalize on these 2023 expertise developments, together with our Robotics & Automation Index (ROBO), Healthcare Know-how & Innovation Index (HTEC), and Synthetic Intelligence Index (THNQ). To be taught extra, go to our web site at www.roboglobal.com.

Webinar Transcript:

Lauren Hein:

Hello all people. Thanks for becoming a member of us this morning for our Disruptive Traits to Watch in 2023 dialog. I am Lauren Hein. I am the top of Advisor Relations at ROBO International. I am right here with our analysis workforce, our esteemed trade consultants, Jeremie Capron, my director of analysis, Lisa Chai, our senior analysis analyst, and Zeno Mercer, our analysis analyst. And we will cowl the applied sciences that actually excite us going into the brand new 12 months. First issues first. You’ll be able to obtain this report at roboglobal.com, and they need to have been emailed out to you at registration as nicely. So they need to be sitting in your inbox if you would like to observe together with our dialog. Our 5 developments to look at this 12 months within the order that we will talk about them at present. Primary, liquid biopsy will allow early-stage most cancers detection. Quantity two, autonomy will redefine mobility. Quantity three, now getting into a world of related care. 4, AR/VR will break boundaries between the bodily and digital worlds. And our ultimate thrilling development 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 developments 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 like the web over the previous 20 years, and in the previous few 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 primarily about robots automating the manufacturing of vehicles. However in the previous few years we noticed robots popping out of the manufacturing facility and discovering super purposes in so many areas, warehouses, logistics, we now have flying robots, we now have robots driving vehicles and vehicles, we now have surgical robots, we now have automated techniques throughout us, in labs, in transportation. So there have been so many areas to select from. And so we slender it all the way down to these 5 developments as a result of we consider they’ll have an essential affect on funding methods over the subsequent few years.

Lauren Hein:

And I did take a look at the 2022 developments report, and there is some continuity there from what you guys have been enthusiastic about final 12 months for positive. Zeno, I will 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 development that we highlighted for 2023 is the idea generally known as liquid biopsy, which is basically the flexibility to detect most cancers within the blood, the objective being to detect it earlier and fewer price invasiveness to stop 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 folks to get therapy for most cancers. So I believe 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 expertise 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 scientific efficacy of this. However in the end, liquid biopsy is a expertise that we actually consider will take off in 2023 with new approvals and elevated uptake of individuals using this going ahead.

Lauren Hein:

Do you may have any particular corporations which might be inside any of our indexes that excite you on this expertise? What would you say is possibly the publicity inside any of our indexes by share 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 take a look at the subsectors, if you’ll, that we now have related to liquid biopsy. It will be remiss to speak about liquid biopsy with out speaking concerning the Genomic area. And we now have about 11% uncovered to the Genomic area by corporations reminiscent of Illumina. So Illumina actually is a pioneer of DNA sequencing, which is really enabling the liquid biopsy area 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 that they had an fascinating story the place primarily they have been doing non-invasive prenatal testing in 2013 on girls who’re pregnant, to detect if their kids, their infants, they have been nonetheless within the womb, had any genetic illnesses, NIPT, non invasive prenatal testing. What they discovered although was that they really detected most cancers tumor DNA within the samples they acquired.

They usually realized that, hey, we’re discovering most cancers in girls and a few of these folks won’t know they’ve it. So they really went out and reached out to all of the folks that had submitted samples, they usually truly found that sure, many certainly had no indication, no signs, no prognosis, something. And so what they realized is that, hey, we’re onto one thing right here and we are able to truly detect most cancers in blood like that. Now, they are not the one ones who’ve performed this. In reality, one other firm known as Guardant Well being had truly already been somewhat additional alongside in progressing their Guardant 360 gadget or assay, actually, which might detect most cancers early as nicely. So these are two totally different corporations that we now have. There’s additionally a 3rd, Vercyte which has quite a lot of merchandise which might be detecting particular cancers reminiscent of lung most cancers, thyroid most cancers, and prostate most cancers, which might be already out there at present and out there to folks to be used and getting for utilization.

So medical doctors 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 take a look at that may detect over 50 several types of cancers. And that is out there to most people now, but it surely’s presently about $850 a take a look at. 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 truly prescribe this take a look at. So there can be an out-of-pocket pay for $850 presently. But when you concentrate on how a lot inexpensive that will be than ready years to detect and discover a later stage most cancers, you’ll be able to actually begin to see the profit right here of how early most cancers detection, at that baseline worth, if it will get lined, may very well be very impactful for the healthcare ecosystem and people’ lives.

Lauren Hein:

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

Zeno Mercer:

Sure. So sooner or later, liquid biopsy will in all probability be part of yearly or bi-annual screening for folks. It may rely, possibly there is a particular most cancers that’s larger danger for a person, and if that take a look at have been cheaper, possibly that will be the take a look at that will be opted in for. However in the end, as the price of sequencing goes down, as this expertise improves and scales out they usually can have improved economies of scale from the price construction, you may positively 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 will have disparities of 5, 10, 20x survival charges for a lot of cancers, and plenty of of these, which haven’t got a correct or established protocol for detection. So that is actually recreation altering expertise that we consider can have speedy 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 take into account within the genomic subsector, are there different secondary subsectors which might be 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 may have corporations which might be 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 performed on web site, usually talking. After which one other secondary market that we even have publicity to here’s a Precision Medication facet. So whereas earlier most cancers detection is a superb factor and might present higher outcomes, on the opposite finish of the spectrum the precise therapy protocols in place are being enormously 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 decreasing most cancers mortality charges and the general price and burden of most cancers from each an financial and alternative price for folks.

Lauren Hein:

Superior. Zeno, positively one thing that touches all people. So thanks a lot for that outlook. Jeremie, I will 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 avoid wasting the provision chain and {that a} manufacturing facility automation tremendous cycle is right here. So possibly an excellent place to start out is speaking concerning the greatest development alternatives in mobility and related autos within the subsequent upcoming 12 months.

Jeremie Capron:

Positive. Nicely look right here, the important thing phrase is autonomy, and autonomy is the subsequent step of growth 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 capable of push it to the subsequent stage, which is autonomy and techniques that may make choices based mostly on their surroundings and the way it adjustments. And in order that’s been enabled by super progress when it comes to computing energy, when it comes to gathering sturdy information units and working machine studying onto them. After which when it comes to actuation and the way these machines are capable of react actually quick. So after all we’re all speaking about autonomous vehicles, 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, business providers, being launched in america 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 a whole lot of traction in areas that you could be not pay attention to. And one of the promising areas, in our view, is admittedly within the warehouse. So it goes again to what you have been saying decrease and about warehouse automation. In reality, there are a whole lot of 1000’s of autonomous cell robots working at present in distribution facilities for e-commerce and in different areas of the provision chain. We expect that is in all probability the faster-growing and most fun piece of autonomous mobility from an investor’s perspective at present. There are a whole lot of corporations concerned on this space, a lot of that are within the ROBO Index.

Lauren Hein:

I wish to ask you subsequent concerning 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? Possibly not in 2023, however additional out?

Jeremie Capron:

Yeah, that is actually the route we’re taking. And if you concentrate on how manufacturing has turn out to be very a lot automated areas like automotive and client electronics and issues like that, these producers are tending in direction of, what we name, the sunshine out manufacturing facility the place you mainly can flip off the lights as a result of there isn’t any one in there. And we’re not fairly there but at present. However I believe the objective for provide chains and warehouses and distribution facilities could be very related. However at present we’re so removed from that. In reality, right here in america, we now have greater than 17,000 warehouses, and a low single-digit share of these are automated at present. So there is a great distance when it comes to adopting all types of automation tools first after which shifting to autonomous cell robots, and in the end the lights out the warehouse.

Lauren Hein:

Really easy segue to corporations which might be going to profit as we do extra autonomous techniques 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 acquired all types of various enterprise fashions. You have acquired 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 techniques, or I can consider Auto Retailer that is based mostly in Scandinavia and does very compact automated storage techniques. That is gained a whole lot of traction and that went public final 12 months.

Lauren Hein:

I will drag you again actually shortly to autonomous autos. Possibly let’s first cease with electrical autos. Do you see a transition within the close to future until all of the vehicles on the roads can be electrical after which the subsequent step can be autonomous autos? Then I wish to speak about corporations which might be going to profit from development in these areas, particularly.

Jeremie Capron:

Yeah, we actually suppose that electrical autos supply a whole lot of benefits over conventional combustion engine-based autos. And the advantages are so huge that the market goes to shift naturally towards that. The large query mark is over the tempo of this transition, and we are able to debate round that, however the development could be very clear and really highly effective. And in the event you take a look at investments being made by OEMs, we have seen a dramatic shift over the previous two to 3 years when it comes to allocating to EVs. In order that development is firmly in place. And it is essential as a result of an electrical automobile is basically a a lot less complicated automobile than a combustion engine-based automobile. There are fewer shifting elements, the upkeep is less complicated, and the design is less complicated, however you want very vital investments when it comes to manufacturing property to ship these.

When it comes to the beneficiaries of the extra electrical and good vehicles, we see rather a lot across the semiconductor trade and the businesses that ship the chips which might be used for the computing facet or for the pc imaginative and prescient facet. And in ROBO, you may discover corporations like Ambarella that does pc imaginative and prescient on a chip, and whose expertise 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’ve not talked about but is drones, drone expertise, particularly for a last-mile supply answer. Is that one thing you suppose is life like? Is that one thing we predict is reasonably priced? And do we now have any drone publicity inside ROBO?

Jeremie Capron:

Sure. Drones, we regard as flying robots, and we predict there’s an enormous market potential for this kind of expertise. At the moment 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 business facet, there’s a terrific alternative to make use of drones for monitoring and surveillance, and surveying outdoor. It may be public infrastructure, it may be energy utilities, it may be utilized in mining and building, and agriculture. And that is the place autonomous drones are gaining traction proper now. So when it comes to publicity inside ROBO, it is as soon as once more going to be on the chip facet, and firms like Nvidia and Analog Gadgets are concerned there, Ambarella and Qualcomm or key suppliers of chips which might be being utilized in drones, and particularly autonomous drones.

Lauren Hein:

Is the FAA on board with this, and are we truly 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 now have sturdy 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 signifies 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 in all probability 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 getting into a world of well-connected care. We will speak rather a lot concerning the web of issues on this part, so possibly additionally speak, outline the web of issues earlier than we actually get going, and speak about healthcare purposes for the IoT.

Lisa Chai:

Oh, positively. I believe primarily what you are actually seeing is that the healthcare trade is admittedly going by this main transformation pushed by rising prices, doctor burnout, lack of nurses, and sufferers positively 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 expertise. And we predict that subsequent 12 months is known as a sturdy 12 months for areas like customized drugs and areas like IoT that you simply talked about. So medical IOT, we’re tremendous bullish. We expect proper now these medical units which might be wearable and moveable 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 expertise 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 units which you could put on, which might be wearable sensors, that monitor real-time well being care information. So physicians can regulate 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 somewhat bit about corporations throughout the well being tech index. I am assuming there’s additionally some crossover with the synthetic intelligence index, however corporations which might be actually integral to this area, to this creating expertise.

Lisa Chai:

Sure. Throughout the healthcare expertise innovation technique, we now have 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 in addition the IoT units. After which the opposite subsector can be Telehealth. And these two subsectors actually seize this bullish development that we will see in 2023 with an amazing quantity of development behind it. A few of the index members which might be actually main this transformation are corporations like Dexcom. Dexcom has developed a transmitter gadget that you simply 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 units. So whether or not it is utilizing cardiac screens or sure forms of pacemakers, you are positively seeing the cardiovascular market actually reworking, the place it is non-invasive, they’re moveable, and also you’re capable of talk along with your physicians, they usually may regulate 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 might be 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 may have any ideas about that?

Lisa Chai:

Sure, I believe you are going to see each of those wearables that provide you with biosensing applied sciences. So it may measure your heartbeat and alert and provide you with detection on whether or not you’re about to have some healthcare points. So that you’re positively seeing a world converging of that diagnostic giving that real-time alert. After which the AI actually bettering and serving to the analytics facet. And now as a result of the cloud has actually improved, and the wifi connectivity has actually improved, we’re capable of get the information actually shortly and get the medical assist that you really want. So you bought the diagnostic facet and clearly on the post-surgical facet, and that is essential as a result of that actually lets you have much less hospital keep, and you’re going to have a greater affected person final result. And likewise the insurers and healthcare corporations are additionally going to see decrease bills for our sufferers and people.

Lauren Hein:

I simply wish to verify additionally for everybody, the applied sciences for what you have spoken about, medical IoT units particularly, aren’t one thing we’re discovering on our smartphones at present, not one thing that is simply mass-produced at this level with the rings or a watch. They’re extra specialised healthcare units.

Lisa Chai:

Sure, positively. I believe what you are going to see going ahead, we will see extra options and applied sciences and innovation round patches, wearable patches that might launch a sure sort of remedy, and that is going to hook up with possibly your smartwatch going ahead, or additionally along with your diagnostic answer. So we will have a world the place we will 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? Possibly 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’d discover this within the Medical Instrument subsector, which is one in every of our greatest subsectors throughout the HTEC technique. You’d 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 have the ability to 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 nicely.

Lisa Chai:

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

Lauren Hein:

Very good. Zeno, we will pivot to you, if that is okay. Let’s speak about breaking boundaries between the bodily and digital worlds. Augmented actuality in digital actuality. Possibly 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 a giant 12 months final 12 months when Meta rebranded Meta as a part of the metaverse. So I believe simply throw that on the market. After which pondering ahead, we have augmented actuality and digital actuality. So augmented actuality can be an overlay expertise or visible display, there are a selection of several types of modalities this might happen, possibly in your dashboard, contact lenses or glasses, or a headset, however primarily it is augmenting actuality. It is a digital overlay. It may very well be audio, it may very well be visible, however in the end it is an understanding, a digital understanding of what is occurring round you and the flexibility for that to offer insights which might be custom-made to you. Digital actuality can 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 various purposes, however in the end it does not require as a lot, there’s a whole lot of 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 in all probability one of many larger Christmas vacation present objects can be virtuality headsets from Fb or Meta and from Microsoft. And largely for gaming proper now. And so proper now, I believe 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 wish to take a stab at defining the metaverse?

Zeno Mercer:

Positive. I believe it is a phrase that goes approach past the simplified single phrase, metaverse, that we use. However primarily there are two totally different types of the metaverse. There may be the augmented actuality metaverse, which truly 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 possibly Meta and Zuckerberg would think about, which is simply residing and interacting purely on this digital world, which I believe is frightening to some folks that we will 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, cell phones, and now we have smartwatches. They’re actually simply methods of portray, speaking and sharing, and having totally different experiences, throughout totally different life levels and totally different types of leisure or studying.

So I believe in the event you’re trying ahead, beginning subsequent 12 months, you are actually going to begin to see extra information bulletins of expertise that can 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 in all probability guess can be somewhat bit higher than Alphabet’s Google glasses that have been launched, at this level, over a decade in the past now. So I believe it is actually not hit folks but that in a decade from now, folks 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 various 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 info may very well be extra real-time and synced to your day by day life, and actually profit folks, each children, and lecturers, in addition to the growing old inhabitants on find out how to navigate the world and get assist in real-time. So we’re actually excited concerning the optimistic advantages that may happen from the utilization and uptick of this area.

Lauren Hein:

So the developments report does a very nice job of laying out a whole lot of purposes for augmented and digital actuality applied sciences. It feels somewhat bit at present possibly we predict that it is all simply gaming, after which we think about ourselves residing in a completely digital world sooner or later, however there’s actually a spectrum. Do you wish to speak about some other purposes for this expertise which might be relevant extra at present?

Zeno Mercer:

Yeah, positive. So I believe one of many extra direct segues from gaming can 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 expertise and issues that may perceive how they be taught, what they know, the place they progress. And that is each from a testing facet and a studying facet. So I believe you may see throughout quite a few disciplines, arithmetic, physics, and historical past, there are going to be an increasing number of methods of personalizing this schooling to allow them to perceive how every particular person learns. This will additionally develop by sports activities and different bodily studying reminiscent of golf or what have you ever, the place it might perceive the way you’re stroking. You have acquired, as we lined earlier about wearables, you may see wearables additionally apply to this augmented and digital actuality the place it might actually provide you with visible and voice cues which might be automated that can assist you learn to do issues higher, possibly even cooking.

So I actually like schooling, studying, and training. There’s additionally collaboration. Proper now we’re on this name, we’re all elsewhere, 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 one in every of us is possibly a TV display or a monitor and look right into a digital camera. Sooner or later, it’s going to be even higher. You may have extra customized dashboards, extra info can be popping up in your display that immediate you and provide you with visible cues. And so even working collectively, every individual will have the ability to work in their very own fashion, however every individual on the opposite facet of it would 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 facet of issues, take into consideration simply navigating a metropolis or a brand new expertise. Possibly you pull out your cellphone and work out find out how to 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 cellphone and it might present you which of them route to go, however you are still not fingers free. And I believe that the subsequent step is that this hands-free, seamless integration of expertise 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 truly helpful expertise that is supplying you with the knowledge that you really want and want in real-time.

Lauren Hein:

So this explicit dialog feels very particular to suppose THNQ, the AI index. You’ll be able to appropriate me if I am flawed on that, however are there any explicit corporations that you simply’re actually enthusiastic about?

Zeno Mercer:

Yeah, I believe I will shortly add one other space you talked about. That is positively very AI-focused, AI is empowering the expertise to create, perceive, and implement this, the infrastructure and software facet. However there is a idea generally known as digital t win, which is basically 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 presently being developed and deployed, reminiscent of navigating surgical, the surgical area of understanding and doing pre-op, customized implants which might be made utilizing 3D era software program that matches the person. And so we’re already seeing actual affect from this, it simply hasn’t been known 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 now have publicity to at ROBO can be, on the infrastructure facet, 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 world 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 essential for these purposes. I believe it is also essential to notice that Nvidia is not only a {hardware} firm. Additionally they have software program that they are actually diving into deeply. And for instance, they’ve not too long ago launched a 3D modeling platform, which primarily enables you to sort in textual content and it will provide you with 3D mesh modeling that you could possibly truly implement within the video games or different experiences. So we’re actually seeing large progress within the AI area and the way it can apply to the totally different subsets of society right here. So there’s semi, the subsequent step can be the networking and different infrastructure that goes into place, like safety.

So as an instance you may have this AI, you may have this augmented actuality, you may have this. How does all of it join? How does it perceive what you are seeing? You should have sensors and real-time processing. So you have acquired large information storage. If we’re going mainly 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 have acquired corporations like Pure Storage and Arista Networks which might be actually highly effective performs right here. On the opposite facet, you are going to have, pc imaginative and prescient for augmented actuality. So corporations like Ambarella, which we have talked about in different developments. I believe that is one factor to focus on actual shortly is that whereas we’re speaking about these developments, we attempt to discover corporations which might be already highly effective and market leaders and have nice expertise, however they’re truly capable of play into totally different mega developments that might see large trillion greenback, 5 trillion greenback markets that aren’t in existence at present, actually.

I wished to briefly spotlight that. So we have now Community & Safety. On the safety facet, we even have cybersecurity. As an increasing number of of our interactions are digitized, because the providers that we work together with are automated, our id and safety are essential. 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 possibly there is a gold vault. Nicely, now it is extra about defending your digital id to just remember to’re the individual accessing it by yourself accord. And that all through the journey of accessing and transmitting information and cash that there isn’t any third get together accessing this information or manipulating it. And so the cybersecurity element with corporations like CloudFlare, Gen Digital, and CrowdStrike, are essential and can turn out to be much more essential as this progresses. I believe it could even be remiss to not speak concerning the corporations which have already been constructing within the 3D area for a while.

This could be corporations like Dassault, Autodesk, and Adobe, who’re mainly pioneers and leaders within the digital 3D area. However I believe I will additionally briefly speak about, I’ve talked about Meta on this name, and we truly do not maintain Meta. They’re actually a really consumer-focused promoting firm, and that is the core of their income. We might somewhat maintain Microsoft as a metaverse play, and basically AI play, as a result of we consider they’re making a lot 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 fingers of people and shoppers in a extra optimistic, impactful approach. So we now have Microsoft in our AI (THNQ) index. I believe 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 area in some unspecified time in the future 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 developments report does have a whole lot of deal with enterprise capital investing in these startups during the last 12 months or actually two years possibly. Do you see our index constituents making acquisitions? Do you see corporations truly IPOing into this area that may very well be potential index constituents? Any form of developments you are anticipating subsequent 12 months?

Zeno Mercer:

Sure. So in the end across the startups on this area 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 trying on the infrastructure performs, the connectivity to permit real-time connections between the units that we’ll be carrying, and the backend cloud infrastructure. When it comes to acquisitions, we’re already seeing M&A within the area throughout safety, and throughout AI. There are a whole lot of startups which might be creating this area, however I believe folks additionally low cost, and possibly worry on the identical time, what corporations like Nvidia are able to doing. With their latest 3D modeling mesh growth they only pushed out, which in all probability simply knocked a whole lot of startups out of the competitors by itself. So I believe it is essential to take a look at which corporations even have actually defensible tech that can be acquired by these massive tech corporations as a result of they’ll look to quickly develop and keep share because the world switches over to this new paradigm.

Lauren Hein:

Which is why market and expertise 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 for 2023. We have talked about semiconductors rather a lot right here at present, and we have truly had the CHIPS act handed in 2022. That can be reassuring a whole lot of semiconductor manufacturing. However speak usually concerning the reshoring development that you simply see for the subsequent 12 months.

Jeremie Capron:

Okay. Nicely look, I believe one of the essential turning factors within the world macro is concerning the finish of globalization, and actually a change in that development that has peaked during the last 5 years or so. And so began just a few years in the past with the business commerce conflict between the US and China. We had the pandemic. Now we now have geopolitics coming to the forefront, and so our view is that the development 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 sequence of main US insurance policies enacted previously few months are actually pointing in direction of that. And we predict that this development will create a significant tailwind for robotics and industrial automation. And it isn’t like automation wants a booster within the present surroundings, as a result of when you concentrate on the issues we’re going through at present, 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 firms have began investing at a a lot quicker tempo, over the previous two years. In reality, demand for automation at present 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 adjustments round globalization or the top of it are going to have a vital affect. That is protectionism, deglobalization, we are able to name it French shoring or reshoring from China into the upper price areas in Europe. Within the US you may have the growing old of the inhabitants, the restriction of migration, the affect of world local weather change, and cyber warfare, as Zeno simply touched on cyber safety. All of that’s actually resulting in a way more acutely aware effort to fabricate domestically. 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 reality, within the second quarter of the 12 months, robotics orders in North America have been up 25%, 12 months on 12 months, and within the first quarter, they have been up 28%. So we’re off to a really, very sturdy 12 months in 22. We expect that developments will proceed into the subsequent few years.

Lauren Hein:

Main corporations benefiting from that development? After which the subsequent query I will ask you, are any particular industries you actually see leaning into reshoring?

Jeremie Capron:

Yeah, so the beneficiaries are a few of the standard suspects, just like the main robotics corporations like Fanuc, or Yaskawa in Japan, ABB, Sweden, Switzerland. You will have KUKA, additionally one of many high gamers in industrial robots. However you even have the businesses that take part in automation management techniques like Rockwell Automation right here within the US, you may have the pc imaginative and prescient gamers like Cognex. Collaborative robots, corporations like Teradyne, that owns Common Robotic. That is acquired the highest market share in collaborative robots that may work alongside people within the workshop. So these are a few of the apparent one, however there’s a sequence 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 simply see reshoring? The development actually accelerates within the close to time period, clearly, it appears like mainly all the things may very well be impacted, however within the close to time period, possibly 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 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 help this, is coming alongside as nicely. 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 direction of electrical autos that we already talked about. And it is essential for buyers to grasp that the manufacturing of electrical autos implies much more automation than conventional vehicles. And that is due to the depth of using robotics to control batteries, for instance, the entire electrical powertrain manufacturing requires extra robots and extra management techniques. 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 possibly AI particularly.

Jeremie Capron:

Sure, I agree. ROBO has very direct publicity to all we simply talked about, from industrial automation to manage techniques, 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 nicely.

Lauren Hein:

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