The Next Big Theme: February 2023
Just one month into the year, a number of big themes are starting to rotate back into a growth phase and new promising thematics are on the horizon. In this month’s Next Big Theme, Global X has picked out some of the most impactful narratives that are emerging across the globe.
Digital Health & Artificial Intelligence
Healthcare Prioritises Wearables
The Food and Drug Administration (FDA) reported that it designated 135 medical devices with breakthrough status in 2022, a notable drop from 213 in 2021.1 To resolve this, in 2023, the FDA plans to prioritise digital health given rapid advancements in artificial intelligence (AI) and machine learning (ML) and improved monitoring and wearable sensor technology. To facilitate innovation, the FDA intends to issue new algorithm change protocols, which can allow for more efficient implementation of modifications without additional submissions. This measure can be particularly beneficial to the wearable tech segment, especially with investment in the space rising. According to a survey of MedTech CFOs, 72% plan to invest in wearables development in 2023.2 With a lower regulatory threshold than other segments, such as surgical robotics, wearable tech may offer a quicker return on investment for these companies given a wider addressable market.
Artificial Intelligence & Cloud Computing
Big Tech Making Waves with AI
Google reportedly invested over $300 million in AI startup Anthropic, which is developing a rival to OpenAI’s ChatGPT, named Claude.3 It is unclear if Google intends to integrate Claude in the same way Microsoft integrated ChatGPT. Anthropic said its partnership with Google Cloud can support the next phase of the company, which aims to deploy AI systems to a wider audience. Google’s other advancements in AI include new features for Google Lens and multisearch. These updates allow users to search using images and text simultaneously and to search directly from their mobile screens with Google Lens. Microsoft introduced an advanced, AI-powered Bing search engine and Edge browser, designed to enhance search results, provide more comprehensive answers, enhance the chat experience, and facilitate content creation.
Ad Spending Slumps as Brands Pull Back
Brands reducing their investments in digital marketing caused advertising spending to decline for the Technology sector in recent quarters. However, we expect ad spending can bounce back as economic conditions improve. As digital advertising becomes more automated and streamlined, platforms such as YouTube and Instagram are emerging as the leaders with most B2C companies eager to increase their ad spending on these channels. A recent survey found that 79% of companies plan to boost their YouTube advertising and 76% intend to increase their presence on Instagram.4 However, in this digital ad decline, Meta Platforms shifted its focus to engagement growth. Meta reported a record 2 billion daily active users (DAUs) in Q4 2022 – a sign that digital social platforms continue to play a central role in our daily lives.5
IIJA Turns to Mega Projects
The Biden Administration recently allocated nearly $1.2 billion in Infrastructure Investment and Jobs Act (IIJA) grants to nine premier surface transportation projects as a part of the National Infrastructure Project Assistance (Mega) program.6 This program, which will invest $5 billion in infrastructure projects through 2026, supports projects deemed too massive or intricate for conventional funding programs.7 Among the projects, $292 million has been allocated for the construction of the New York-New Jersey Hudson River tunnel, and $250 million will go towards renovating the Brent Spence Bridge linking Kentucky and Ohio.8
Advanced Headsets Augment VR Capabilities
Sony is preparing to release its next-gen virtual reality (VR) headset for PlayStation 5 in late February.9 The PS VR2 boasts advanced features such as haptic feedback, adaptive triggers, inside-out tracking, and eye tracking. While current PS VR games may not be compatible with the PS VR2, developers are working on making their games compatible. Apple plans to integrate mixed reality (MR) in its Reality Pro VR headset, which it aims to launch in early 2023.10 In VR, Meta announced that it plans to launch its new consumer- oriented headset, the Meta Quest 3, later this year.11 The headset includes full-colour MR features, marking a major shift in the VR industry and Meta’s focus on shared virtual spaces.
Lithium & Battery Tech
Industry Leader Forecasts Strong Lithium Demand to Continue
Albemarle, a leading lithium producer, recently shared its 2023 outlook, which includes upwardly revised projections for global lithium demand. The company now forecasts growth of 4.6x between 2022 and 2030, up 15% from its previous forecast. The company has consistently revised its projections higher since 2020.12 To meet the increasing demand for lithium, Albemarle plans to expand its lithium mining and conversion capacity, targeting a significant increase from 200–225 kilo-tonnes per annum (ktpa) in 2022 to 400–650 ktpa by 2030.13 With these strategic initiatives, the company expects its lithium sales to grow at a compound annual growth rate (CAGR) of 20–30% between 2022 and 2027.14