As people suffering from unemployment look to develop new skills, there could be a shift towards education for a portion of the adult population, while digital entertainment could lead to additional spending in the coming years. Automation brought about by AI, VR and AP could result in new types of jobs and work and enable the development of higher-margin businesses. Self-driving vehicles could also result in infotainment opportunities. In light of these developments, companies will need to invest heavily in data center technology in the coming years, while demand for legacy technologies may decrease.
Company specific thoughts:
Companies that are well positioned in this sector include NVIDIA (NVDA), Arista Networks (ANET), Synopsys (SNPS), Cisco Systems (CSCO) and ASML. NVDA, ANET and ASML are pushing the boundaries of technology, while SNPS and Cadence Design Systems (CDNS) are playing a notable role in chip development. Meanwhile, CSCO’s large install base means the company is well positioned to capture more data.
When it comes to area of opportunity, NVDA and ANET could benefit from more spending on data centers. EDA and Semicap Equipment could benefit from more investment in complex chips. There are also opportunities to make more use of robots/AI in everyday applications, from manufacturing to healthcare.
Technology: Up close
The future will be determined by those who are willing to reinvest, adapt and turn future threats into opportunities.