Presenter: Justin Lenarcic, Senior Wealth Investment Solutions Analyst, Wells Fargo Investment Institute
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Twenty-five years ago, IBM’s Deep Blue defeated chess grand champion Garry Kasparov and the world took notice of artificial intelligence, or AI. Today, thanks to AI, computers have learned to write poetry, smartphones find the quickest route to the office, and driverless taxis transport passengers in Arizona.
In April 2003, scientists announced the mapping of the entire human genome. Today, doctors are beginning to use gene therapy to treat inherited and acquired disorders and scientists designed the COVID-19 vaccine two days after the virus’s genetic code went public.
Disruptive, transformational technologies like AI and the gene editing breakthrough CRISPR, are entering a new era that likely will impact our lives and drive innovation for decades.
Three key ingredients have converged to propel us into a new era of Artificial Intelligence — big data, faster computers, and machine learning algorithms.
Humans consumed an astonishing amount of data last year, and researchers anticipate data consumption is likely to increase more than two-fold by 2025.
And while only 65% of the world’s population has access to the internet, that percentage increased 10% in just six months last year.
These increases are quickly pushing the bounds of computing power. Super computer processing capacities have increased even faster than anticipated.
The simultaneous increase in both data and computational speed has ignited interest among computer scientists in building algorithms to organize and analyze data — driving a new era of AI.
Global corporations are emphatically embracing this trend.
Using supercomputers to harness the power of data also extends to the fabric of our being — DNA.
Nearly 20 years after the dawn of gene therapy, recent advancements are making it possible for researchers to pinpoint what causes certain diseases, and repair and replace genes via CRISPR. The genomics revolution will help scientists understand and treat some of our biggest health care challenges.
From a high level, we expect the Information Technology and Communication Services sectors to benefit from the modern evolution of AI. Companies with the largest pools of capital and data should prevail among the multiple long-term technology trends.
The Biotechnology sector continues to become increasingly intertwined and reliant on developments within genomics and gene therapy. The sector has seen a significant increase in companies specializing in genomics-related technology.
These firms are low quality and typically struggle mid-late cycle as liquidity begins to evaporate. In the future, these smaller cap firms may present an attractive acquisition opportunity for some of the larger players in the S&P 500.
For more ideas about how to leverage these advancements over the next decade, read our Wells Fargo Investment Institute special report: Transformative technologies — Investment opportunities in artificial intelligence and genomics.