These Two Powerful Forces Will Drive Tech Stocks WAY Higher

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The world feels a bit crazy right now.

We have a hot war in Europe for the first time since the 1940s. Fears of nuclear warfare are as high as they’ve been since the 1950s. Inflation is running at levels not seen since the 1970s. And gas prices are surging to their highest levels ever.

And as a result, stocks are crashing.

Yet, amid the chaos on both Main Street and Wall Street, my team and I are staying calm, cool and collected. Instead of running from this selloff, we’re embracing it.

Why? Because while the world may seem crazy at the moment, it’s not ending. Indeed, as the adage goes: This, too, shall pass.

Soon enough, Putin will be stopped. Geopolitical stability will be restored. Economic sanctions will be removed. Supply chains will be healed. Inflation — and gas prices — will sink down lower.

Make no mistake. Inevitably, all that will happen.

And when it does, stocks will rebound in a huge way. But not all will be treated equally. Rather, tech stocks are going to crush all others when the big market rebound does arrive.

Again… why? To answer that question, we need to zoom out and look at the “big picture.”

The World Is Rapidly Changing

The world today is a lot different than it was just 20 years ago.

Laws have changed. Presidents have changed. Sports teams have changed. And the price of gas has certainly changed.

An image of a speedometer with the words "exponential technology" at the maximum
Source: iQoncept / Shutterstock

But the most important of these differences has been the global takeover of technology.

Twenty years ago, work was defined by going into the office and writing things down paper. Today you can work from home via Zoom (NASDAQ:ZM) meetings and crunch all the numbers you need to in Microsoft (NASDAQ:MSFT) Excel.

You used to go to a bookstore to find your favorite books and magazines. But today you read all that stuff on an iPad.

Your kids would collect sheets of paper with a list of every student’s home phone number on their first day of school. Today you just keep those numbers in your iPhone.

Twenty years ago, you fought your way through busy malls and rushed to Blockbuster on Friday night to make sure the latest rental was still in stock. Now you buy stuff from Amazon (NASDAQ:AMZN) and stream movies through Netflix (NASDAQ:NFLX).

Technology has taken over the world.

It’s amazing when you sit back and think about it. Everything about our lives — quite literally, everything — has changed over the past 20 years, thanks to technology.

But if you think that’s crazy… well, then, I must warn you that you haven’t seen anything yet…

Because the next decade will have more technological disruption than the past 20 years combined — and then some!

And while that is my opinion, it’s also a fact. There are two powerful forces at work here that all but guarantee the pace of technological progress is only going to speed up in the 2020s. That’s regardless of what Putin does, or where inflation lands, or how high gas prices go in 2022.

These two forces matter more than all that combined.

Moore’s Law Will Help Tech Stocks Thrive

The first force is known as Moore’s Law.

Back in the 1960s, Intel (NASDAQ:INTC) founder Gordon Moore — who hailed from my alma mater, Caltech — observed that the number of transistors per square inch on integrated circuits seemed to double every single year. He predicted that this trend would continue well into the future. This phenomenon became known as Moore’s Law.

Few believed Moore’s Law would hold true as we went from just a handful to thousands of transistors. But, lo and behold, it has remained true!

Just look at this chart below. The number of transistors on a semiconductor chip has consistently doubled every single year over the past several decades. And the result is exponential growth in underlying computing power.

Chart showing growth of computing processing power
Source: InvestorPlace

In other words, thanks to Moore’s Law, the computing power of technological products and services is only going to get exponentially better at increasingly faster rates over time.

Remember how it took decades to go from landlines to cellphones? And then just about a decade to go from cellphones to smartphones? This acceleration in adoption of innovative technology — based on an acceleration in the development of underlying technology — is due to Moore’s law.

And also thanks to Moore’s Law, we’ll likely shift from smartphones to some futuristic communication device — like augmented reality glasses — over a few years in the coming decade.

Moore’s Law is a historically proven phenomenon that promises to accelerate the capability of our technological platforms over the next two, three, five and even 10-plus years, regardless of what happens in Europe or to gas prices. Indeed, this phenomenon has already endured through war and record inflation.

This time is not different. Over the next decade, Moore’s Law will help tech stocks not just survive but thrive long after the current crisis passes.

Wright’s Law Is Playing a Huge Role

While many folks know about Moore’s Law, most don’t know that it may not even be the most important driver of exponential tech progress in the modern world.

Instead, that title may be reserved for Wright’s Law.

While studying airplane manufacturing in the 1930s, U.S. aeronautical engineer Theodore Paul Wright determined that for every doubling of airplane production, the labor requirement was reduced by 10% to 15%.

Wright extrapolated this phenomenon to all products and services, cementing what has since become known as Wright’s Law. This states that for every cumulative doubling in manufacturing capacity of a product or service, the costs to manufacture it drops by a consistent percentage.

Like Moore’s Law, Wright’s Law was doubted in its early days. But it has held true. Perhaps one of the greatest exhibitions of Wright’s Law is the cost-decline curve of the Tesla (NASDAQ:TSLA) Model 3, presented below by our friends over at Ark Invest.

Chart showing model 4 cost decline curve

In other words, not only is technologically get exponentially better; it’s also getting exponentially cheaper.

That’s a powerful combination, implying that over the next decade, the pace of technological progress and disruption is going to accelerate — regardless of what happens with Putin, gas prices, inflation, or the Fed.

So… what’re we doing this selloff? We’re letting the big-picture principles behind Moore’s Law and Wright’s Law guide to us to buying the dip in hypergrowth tech stocks that — following their recent crash — now offer what we see as 10X, 20X, and even 30X upside potential in some cases.

Grab the Next Amazon of Tech Stocks

You think technology took over the world in the 2010s? Just wait for the 2020s.

You’re going to start seeing self-driving cars, flying taxis, space tourism, automated factories, AI-powered smart homes, virtual reality games and so much more.

The pace and magnitude of technological disruption in the 2020s will be unprecedented. And if you’re on the wrong side of this shift, you’re going to get crushed. You’ll be left holding the next Blockbuster, Sears or J.C.Penney.

But if you’re on the right side of this, you’re going to make a fortune. You’ll be invested in the next Netflix, Amazon or Tesla.

And I want to put as many people on the right side of this shift as I can.

Today, amid a market crash on Wall Street fueled by near-term stressors, I have a compelling opportunity to put a ton of people on the right side of this shift at truly once-in-a-lifetime prices.

That’s why I’m about to capitalize everything in this next sentence: YOU NEED TO BUY THE DIP IN TECH STOCKS.

The war in Europe will pass. This bout of red-hot inflation will pass. The gas price surge will pass. The market’s obsessive focus on the Fed’s policy will pass.

Moore’s Law, however, won’t; nor will Wright’s law. Neither, therefore, will anything about the pace of technological progress in this world.

Tech is going to be keep taking over. That’s the most powerful secular force in the world. And I like to invest in secular forces.

Find out more about how to capitalize on this huge opportunity in tech stocks today.

On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article


Article printed from InvestorPlace Media, https://investorplace.com/hypergrowthinvesting/2022/03/these-two-powerful-forces-will-drive-tech-stocks-way-higher/.

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