Head of BofA Global Research
Fly me to the moon, let me play among the stars. This week we discuss 14 radical technologies of the future (aka “moonshots”); how tech is helping to make drugs better, cheaper and faster; and how delivery is helping retailers compete with Amazon.
Imagine investing in the internet before the dot.com boom. Haim Israel, head of our Thematic Investing team, examines the next 14 “moonshots” that could change our lives, including Immortality, Holograms and OceanTech. Though some of these may seem too far off to matter, remember that the adoption of many technologies—like smartphones or renewable energy—have surpassed experts' forecasts by decades, because we often think linearly, while the progress actually occurs exponentially. A paradigm shift in the explosion of data (we are generating 2.5 quintillion bytes of data every day), faster processing power (>1 trillion-fold increase since Apollo 11), and the rise of AI (already same IQ as a 6 year old) would bring about the fastest rollout of disruptive tech in history.
In the past 30 years, only 1.5% of companies generated all the net wealth on the global stock market, making stock picking paramount. Among the biggest beneficiaries in Future Tech are Semiconductors (which will impact 6G, Brain Computer Interfaces, Emotional AI & more).
The drug industry is long overdue for disruption as it typically takes 10-15 years to bring a new drug candidate to market, with an all-in cost of $2-3B. Despite great strides in scientific toolkits which give researchers access to novel insights, Healthcare analyst Mike Ryskin points out the underlying R&D processes are often decades old and success rates continue to decrease, with more than 95% of drug programs ending in failure. Recently we’ve started to see some companies employing Artificial Intelligence (AI) and Machine Learning to identify new drug targets, while others are using physics-based computational models to design new molecules that are outside the realm of what a traditional chemist would synthesize.
There are also software solutions which are helping to speed up and improve the clinical trial process. While the potential value-add and gains are sizable, this field of tech-enabled drug discovery is still in its infancy with a lot left to prove.
Delivery Wars are heating up as traditional brick and mortar merchants (like Walmart, Target and even the corner store) are taking the fight to online retailers (Amazon) with local delivery. Internet analyst Justin Post highlights the U.S. local delivery TAM (total addressable market) is $3.2T, with delivery service penetration for third-party delivery platforms at just 4% of 2025 estimates.
New categories like Convenience (up 350% Y/Y in 2020) and non-food retail are rapidly shifting online, and we estimate Grocery/Convenience/Alcohol is only 8% penetrated in 2021, potentially rising to 25% in the long-term. There is still room to grow penetration of restaurant spend in the U.S., with up to 70% of restaurants still not signed up for delivery services.
Must Read Research will return on October 3rd.