By now you know that I am always looking ahead to the next generation of everything, from things that affect our day-to-day lives to social trends to the stock market. One area that is ripe with innovation right now is technology.
Some people think technology peaked when the NASDAQ hit its previous all-time high back in 2000. It did take 17 years to return to those levels, but here we are, and it’s no accident. We are now in a new phase of the Technology Revolution, and there are plenty of NexGen companies leading the way in technologies that you may not think much about or maybe haven’t even heard of – yet.
This week I want to talk to you about one of those companies, which I’m sure you are very familiar with, and one of those technologies, which you may not know much about.
Let’s start with the company: Apple (AAPL). Yes, I’m all about finding companies that are off the radar and that Wall Street isn’t paying much attention to yet, but Apple is one we can all agree on. That’s why it has the largest market capitalization in the world – and by a wide margin over some other pretty innovative companies like Alphabet (GOOGL), Microsoft (MSFT) Amazon.com (AMZN) and Facebook (FB).
It’s also why websites were live blogging the annual Apple Worldwide Developers Conference that just ended yesterday. The question is whether this glimpse into the future gives consumers and investors enough excitement to move the needle on a company that size.
I would say they did a pretty good job this year. Here are the key developments:
The newly introduced HomePod speaker is poised to take on not only Amazon Echo and Google Home but also the speaker/music system Sonos (which I own a few of). This is big news because HomePod combines the ability to connect music all around the house with the ability to functionality of Siri. The latter is what had set the Echo apart, and this latest move makes Apple once again look like the leader in a new category.
Apple is also expanding the capabilities of Apple Pay so you can make person-to-person payments through iMessage, avoiding the need to download an additional app such as Venmo or Square Cash. I love the mobile payment sector, especially with the huge millennials generation so used to it, and this is another big move by Apple.
Augmented Reality Is About to Take Off
Then there is the new ARKit, which will allow developers to make augmented reality (AR) apps for the iPhone. This is the cool new technology I wanted to talk about.
AR is an early-stage technology that has the potential to be a NexGen mega-trend. It could even replace smartphones. That’s about as next-generation as you can get!
Augmented reality uses technological advances in cameras and graphics to bring together the real world with a digital world. For example, we may one day have AR glasses (like the Google Glass concept) where we see everything we’d typically look at on your phone pop up right before your eyes. No more walking around with your head down and buried in your phone.
Another example is Pokemon Go. Remember that craze? It is an app that puts pictures of Pokemon characters in the world around you, and you’re supposed to capture them. You could be walking through Central Park and a demon appears, or one of them is supposedly on the North Lawn of the White House. The popularity created some problems with people showing up in unwanted locations and getting injured because they were looking at the digital (their phones) instead of the real (the actual world!), but it was a glimpse to how this technology should catch on. This game has now been downloaded over 100 million times and has more than 20 million daily users.
The AR market could grow from nearly nothing today to $100 billion by 2020, according to Digi-Capital. That’s huge growth in a very short amount of time. Nearly half that revenue is expected to come from sales of hardware.
Because augmented reality is in its early stages, there is no clear leader – yet. The big boys are all going after it, though, and Apple’s new ARKit is significant. It will make it much easier for developers of AR apps because they will be able to use the iPhone and the new kit instead of outside sources. Apple has definitely set the bar much higher and will once again be the first out of the gate. This company continues to be a leader in the technology revolution, and even though it’s so well-known, I would consider recommending it in NexGen Investor given the right buying opportunity.
One of the more pure plays in the augmented reality/virtual reality space is Himax (HIMX), which makes some of the hardware like chips, controllers and displays and more. The stock has struggled of late, so I would not buy it here, but it is a company I continue to follow and whose chart I analyze closely for the right buying opportunity.
Augmented reality is one of the new and exciting parts of the next Technology Revolution. This is yet another powerful mega-trend that is going to last for the next decade if not longer and give us a lot of great investments along the way. We’re already up more than 30% in just a little over a month in our virtual doctor’s office stock. But it’s not too late. This is only the first or second inning, so there is still a lot of money to be made.