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Connecting Two Trillion-Dollar Trends

Jeff Remsburg

Finding the sweet spot that connects two separate trillion-dollar trends

You’re in the back of a driverless car … You’ve just pulled up to a four-way stop sign at the exact same time as three other driverless cars.

Who goes first?

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Up to now, our driverless technology has largely been limited to cars broadcasting their location, speed, and direction. But that’s about to change.

Two massive trends are beginning to overlap. And the outcome is going to be great for consumers, and potentially life-changing for select investors.

On one hand, we have the massive trend of driverless cars. The old science fiction fantasy is practically here, and is going to add $7 trillion to the global economy. Over the coming years, we’ll see traditional commuting change forever.

On the other hand, we have the equally important trend of 5G connectivity. This is the quantum step in communication bandwidth that will power the next wave of technological innovation — think the Internet of Things, artificial intelligence, augmented reality, and yes, driverless cars.

I imagine these two trends coming together like a Venn Diagram. Now, each “circle” alone has huge investment implications. But the overlapping part, where two separate trillion-dollar trends, come together? Well, that’s quite a sweet spot.

Back to the four driverless cars arriving at the stop sign …

So, what happens now?

From CNET:

Self-driving cars can already see and think for themselves. But a newer technology that will run on soon-to-launch 5G networks promises to give them another advanced skill: the ability to talk with one another.

Cars won’t just broadcast their location, speed and direction — something some already do today with today’s 4G networks. They’ll also be able to negotiate taking turns at stop signs or merging into lanes, the digital equivalent of human drivers making eye contact …

Smarter self-driving cars will be able to decide what to do on their own instead of handing control back to a human or slowing…

The article is referencing full automation (Level 5 in the graphic below). We’re closer than ever to getting there.

In today’s Digest, let’s take another look at driverless cars and 5G connectivity. In recent months, these trends have received less spotlight as the trade war, yield curves, and “tweet storms” have dominated headlines. But their wealth-building potential remains enormous.

Adding to that, as we’ve noted in recent Digests, if we are nearing a shift in the stock market, then having exposure to key trends that will outperform while the broader market is wobbling will be more important than ever.

So, let’s revisit the investment potential of both trends, then point toward the Venn Diagram overlap which is home to a handful of key stocks, poised to ride these trends higher.

***The enormity of the driverless car investment opportunity

Regular Digest readers know we believe self-driving cars — aka “autonomous vehicles” (AVs) — represent one of the biggest investment opportunities of the next 25 years. This innovation will transform huge portions of our economy and create trillion-dollar ripple effects.

Tracking this trend is Matt McCall, the editor of Investment Opportunities. Here’s how Matt recently described the opportunity in front of investors with driverless cars:

The car as we know it is on the verge of a transformative change not seen since it was invented. In fact, the whole transportation sector is now poised for its version of 2.0.

I’m not exaggerating when I say this will lead to trillions of dollars in money sloshing around in the coming decades …

UBS estimates that global revenue from self-driving technology could reach $2.8 trillion by 2030. That is massive, and considering it is basically zero at the moment, over $2 trillion will change hands in the next 12 years if UBS is correct.

ARK Investments goes even bigger. It sees the autonomous platform industry being worth more than $4 trillion by 2030.

I see electric and autonomous vehicles as the biggest investment opportunity of the next 20 years for one main reason … the sheer number of dollars we’re looking at. We could see a $7 trillion shift in the transportation industry. That’s more than the economies of 188 of the 190 countries in the world.

Advances are coming fast toward fully-autonomous vehicles. For example, eight days ago, Waymo, announced it will begin piloting autonomous cars in Florida. That’s an expansion from its initial test cities of Novi, Kirkland, Washington, San Francisco, and Phoenix.

What’s the draw of Florida?

Waymo spokespeople point toward heavy rain.

Driverless technology has developed to the point where it’s ready to tackle sketchy driving conditions.

Speaking of sketchy driving, it was just three weeks ago that autonomous vehicles arrived in New York.

Six autonomous vehicles are now shuttling passengers on a mile-long loop at the Brooklyn Navy Yard.

While these driverless vehicles aren’t cruising down Broadway just yet, their presence is a reflection of the progress being made toward this technology affecting our daily lives.

So, back to our Venn Diagram, let’s consider this the first “circle.” What about the investment potential of the second circle?


***The potential with the 5G connectivity revolution

To understand just how many dollars will be connected to 5G, we have to back up momentarily.

Over the last three years, the U.S. won the battle of 4G. And the prize for that? In 2016 alone, the win increased U.S. GDP by $100 billion, created additional jobs, reduced consumer costs, and helped lead to the development of more advanced applications.

Yet that’s nothing compared to the prize for 5G supremacy…

From The Hill:

5G promises to have an even larger economic impact, as the technology is projected to enable more than $12 trillion in global economic output by 2035. Here at home, when the entire 5G value chain is considered, some expect the benefits to top $3.5 trillion, support 22 million jobs, and contribute the equivalent of the entire economy of India to real American global GDP.

With speeds up to 100 times faster than 4G, lag-time lowered by a factor of five, mobile data volumes 1,000 times greater than today, and lower drain on batteries for remote cellular devices, 5G will enable new capabilities and unlock innovation across the economy.

Just yesterday, Matt made a similar point to his subscribers about 5G’s capabilities and speed. From Matt:

5G is coming– and it’ll take us to the next level of wireless communications. Not just for consumer products, like our iPhones, but for industrial applications, advanced medicine, and even transportation …

The speeds 5G provides will be the catalyst for just about every other game-changing technology that’s coming down the pike.

***So, where and how are these two technologies connecting?

As Matt has pointed out, 5G’s ability to connect more devices and share more data in real-time is where it intersects with driverless technology. For these smart cars to operate safely, they’ll require lightning fast, stable internet connectivity.

From Matt:

As you can see in the Intel image below, data is king in AVs. In order for it to move quickly enough, the network needs to be faster. That’s why the 5G revolution is so important.

Just yesterday, an article from CNET connected these two trends even further, pointing toward a new technology called C-V2X:

The technology initially should help conventionally driven cars — for example, warning you about collision risks or icy roads. But it’ll really shine by making autonomous vehicles more capable and thus more practical, advocates say. Smarter self-driving cars will be able to decide what to do on their own instead of handing control back to a human or slowing down to try to avoid a problem.

“C-V2X will unlock the full potential of self-driving technology by adding an additional sense,” said Maxime Flament, chief technology officer of the 5G Automotive Association.


***What companies are connected to this nexus of driverless cars and 5G?

CNET goes on to note that 5GAA, which is a consortium backing C-V2X, had eight founding members back in 2017. Today, it has 120. Frankly, it reads like a “who’s who” in regards to the big players of these trends.

Back to CNET:

Carmakers including Audi, BMW, Daimler, Ford Motor, GM, Honda, Hyundai, Nissan, Volkswagen and Volvo are members. So are tech companies, such as Intel, Samsung and Qualcomm; auto electronics companies like Alpine, Continental and Bosch; network equipment makers including Nokia and Ericsson; and carriers AT&T, T-Mobile, Verizon and Vodafone.

It turns out, Matt recently put Nokia in the spotlight himself. From Matt:

One company I like is Nokia (NOK), which makes 5G gear. I mentioned it in the 10X Innovation Summit along with a couple of other plays. (If you want to learn more about those, you can watch the replay here.) A lot of investors have forgotten about this stock and think of the old Nokia phones nobody has any more. The company now makes networking equipment and software, and there’s a huge need for both as wireless communication moves into the next generation. Nokia recently beat Wall Street’s earnings estimate by 100%, and the stock pays a solid dividend, too.

If you’re looking for companies poised to ride the 5G and driverless car trends higher over the coming decade, the list above from CNET is a good place to start. But Matt has spent months digging into these trends, identifying a select few stocks that stand to benefit the most. They range from pure-play investments, to “pick and shovels” approaches, to related, boutique, niche sectors you likely haven’t even considered.

As Matt recently wrote to subscribers:

Powerful new car makers, component makers, and software makers will take their market share and deliver massive rewards to shareholders. I’m talking on the order of 2X, 3X, 5X and even 10X your money …

To learn more about which driverless car and 5G stocks Matt sees creating the biggest returns over the coming years, click here. At a minimum, if these trends aren’t represented in your portfolio, I hope you’ll take the time to consider adding exposure to them today. The wealth potential is enormous.

Have a good evening,

Jeff Remsburg

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