On Tuesday, a massive three-hour outage on the workplace collaboration tool Slack frustrated companies and workers all over the world.
Then on Wednesday, another workplace-communications tool, the Zoom-like RingCentral, experienced problems in North America. Folks stuck at home had to reschedule virtual meetings or download some other tech communication software and learn it on the fly.
On a normal workday, these sorts of slowdowns are vexing. But during a pandemic, when so many of us are working from home, they’re beyond aggravating and can cause major loss of revenue.
In India, though, such problems are much worse … and they further emphasize how important technology is in all of our lives.
During 2020, India experienced over 8,927 hours of blacked-out or curbed internet access, more than any other country.
As Bloomberg reports:
Internet shutdowns cost India $2.8 billion, putting the South Asian nation at the top of a list of 21 countries that curbed citizens’ web access in 2020.
India — the second-worst-hit nation by the COVID-19 pandemic in terms of overall confirmed infections — accounted for about three-quarters of the $4 billion lost worldwide to internet curbs. It’s losses more than doubled compared to 2019, a report from a U.K.-based digital privacy and security research group showed.
Now these internet blackouts occurred for political reasons we don’t need to cover here. Look it up if you’re interested.
But the consequences are absolutely essential to understanding the phenomenon I call the “Technochasm.”
And they demonstrate why a certain segment of technology stocks are the best way to get on the right side of a major market shift.
Let’s take a look …
Why We Need More Bandwidth
By this point, I’m sure you’re aware of the Technochasm. That’s the phenomenon in which we find thriving technology businesses and professions outperforming everything else.
And the COVID-19 pandemic drove an even bigger wedge between these two sides to force them further apart than they’ve ever been.
Think back to earlier in 2020, when the S&P 500 Software Index hit a new all-time high. At the same time, U.S. employment plummeted from an all-time high to a 24-year low. The chart below tells the tale …
Once the pandemic struck, nearly every industry or profession that involved direct human interaction found itself face to face with a shutdown order … and zero revenues.
From hairstylists to dentists, from cable installers to bowling coaches, the inability to transition from the normal, physical mode of business to a virtual mode caused extreme loss of livelihood.
Meanwhile, every individual who could shift to some sort of work-from-home lifestyle did so — and started using tools like Slack and RingCentral a lot more. Quite obviously, the types of businesses and professions that can operate out of a home office tend to be more technology-based than those that can’t.
Our economy will always feature a wide array of enterprises — some of which require intense human interaction, and some of which require no interaction whatsoever.
The Slack and RingCentral slowdowns were annoying … but imagine if sustained, India-style internet outages were commonplace here in the United States.
The effects would be devastating. Recurring outages would cripple the most vibrant portions of our economy during this “stay-at-home” era.
Year by year, our lives have become increasingly connected to the internet, and the pandemic only accelerated that trend. As such, we need to update and shore up our internet infrastructure to prevent billion-dollar losses and economic disasters.
This quest to create new network infrastructure is already creating incredible investing opportunities in the same way that many great transportation and communication projects throughout American history have.
- The Panama Canal Purchase Act of 1902 enabled the country to cut shipping times from New York to San Francisco by months. It produced a huge economic opportunity.
- The same thing happened when President Eisenhower signed the Federal-Aid Highway Act of 1956, expanding the Interstate Highway System by allocating $25 billion for construction.
- Following closely on the heels of this massive undertaking, President Richard Nixon signed into law the Airport and Airway Development Act of 1970. This act expanded and beefed up the nation’s airport and airway system, which had become inadequate due to the rapid growth of aviation.
These ambitious transcontinental infrastructure achievements did not simply enable individuals and businesses to conduct the same tasks more quickly. They gave them the freedom and incentive to devise entirely new businesses and ways of life.
Each of these infrastructure enhancements, and many more, transformed commerce as well as the American lifestyle. They opened the door to completely new modes of commerce and enabled completely new ventures.
At every step of the way, forward-looking entrepreneurs and investors made millions … or at least a lot of money.
Today, at this very moment, a similar opportunity is presenting itself. It is a once-in-a-generation opportunity to invest in the beneficiaries of a brand-new “information highway.”
It is an information highway that is 100 times faster than the one we use today …
Adding Trillions to the Economy
I’m talking about the nation’s up-and-coming 5G communications network. This new technology is the next generation of mobile broadband that will replace or augment existing 4G LTE connections.
5G technology drastically improves upload and download speeds, while also improving latency, which is the time it takes devices to communicate with wireless networks.
The current 4G network delivers around 100 megabits per second. But once 5G rolls out, that number jumps to 10,000 megabits per second — or 100 times faster than the current speed.
What does “100 times faster” mean? It means that an entirely new generation of technologies, including autonomous vehicles and the Internet of Things (IoT), may become feasible and flourish.
We cannot yet imagine what other innovations 5G will enable.
Qualcomm Inc. (NASDAQ:QCOM) estimates that 5G networks will generate a whopping $13.2 trillion in global sales activity by 2035. The table below shows the five industries that stand to benefit the most.
Clearly, we’re on the cusp of a 5G revolution … and this revolution will create enormous opportunities for select companies and their shareholders.
But how do you sift through all the companies claiming they’ve got 5G-sized gains in their future? After all, Western governments and telcos are working hard and spending billions to create new 5G networks … while avoiding Chinese contractors.
And so, there are huge profit opportunities for entrepreneurs and their investors.
A variety of companies and industries will benefit from this large-scale investment in 5G infrastructure. Check out this special presentation on the U.S.-Chinese economic “cold war” to find out more about one of the companies should be near the top of the list.
On the date of publication, Eric Fry did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Eric Fry is an award-winning stock picker with numerous “10-bagger” calls — in good markets AND bad. How? By finding potent global megatrends … before they take off. And when it comes to bear markets, you’ll want to have his “blueprint” in hand before stocks go south.