Four next major technology investment opportunities

Artificial Intelligence (AI), quantum computing, superconductors, renewables and climate technologies present excellent opportunities for those looking to invest in the “next best thing” in tech. 

This is according to Nedbank, which, in a recent research note, shared the next big technologies investors should watch out for.

“In the past few years, we’ve heard talk of technology’s ‘next big thing’ applied to various innovations – whether it was cryptocurrency, non-fungible tokens (NFTs), or more recently, artificial intelligence (AI),” the bank said. 

Nedbank explained that while truly ground-breaking tech innovations can have massive knock-on effects for various industries and governments, transforming both business and society at large, it is important to look beyond the hype.  

“It’s never advisable to focus all your attention on one sector only, even if you consider yourself a tech expert.”

The bank warned that the hype cycle could lead to investors becoming too hooked on the tech sector. It is crucial to diversify your investments to reduce your risk, and this is especially true for the tech industry.

For example, industry research shows that overconcentrating your portfolio holdings in large US technology companies is a great idea when their value is rising.

“However, after becoming 1 of the top 10 stocks in the US market, their gains tend to fall away. Most of them fail to outperform the market after they reach the top 10,” the bank said,

“Therefore, try to diversify your investment in different sectors while keeping in mind that many tech trends are interconnected with other industry sectors, such as cloud computing and fintech.”

More speculative investors should monitor the performance of these tech-driven sectors and their dominant companies but avoid over-committing to one sector.

Below is what Nedbank advised those interested in investing in innovative technology with the potential for rapid global growth should be looking out for beyond the hype.

Artificial Intelligence

AI has been a major focus in the tech world over the past year, with AI companies continuing to draw significant investment. 

From machine learning to natural language processing, AI holds transformative potential across various industries. 

“While large language models (LLMs) have dominated the AI discussion – for example, how apps like ChatGPT make it much easier to search and process natural language – this is only the beginning,” Nedbank said.

“Generative AI (GenAI) is gaining prominence by reducing app development time and bringing powerful capabilities to non-technical users.”

McKinsey estimates that GenAI could add nearly $5 trillion (R91 trillion) to the global economy through specific applications and productivity enhancements. 

“It does so by building on existing technologies like applied AI and industrial machine learning,” Nedbank explained.

“GenAI can automate, augment and accelerate work by tapping into unstructured datasets to enable the creation of new content in various forms, such as text, video, code, and even protein sequences.” 

“This applicability across different industry sectors makes generative AI very interesting for investors and businesses looking for drivers of growth.”

A key aspect of GenAI is its foundation in machine learning models, which are used to solve problems related to classification, prediction, and control. 

These models can automate tasks, add or augment capabilities and offerings, and improve decision-making across organisations, assembly lines, and other complex business and industrial contexts.

The rapidly evolving ecosystem of software and hardware solutions is making it easier to develop, deploy, and maintain machine-learning technologies.

“With the rapid spread of AI – both in generative technologies and in machine learning – there are many individual companies worth examining in the sector with investment potential.”

Quantum Computing

Forbes explained that quantum computers will make it possible to solve many highly complex problems at extraordinary speed, potentially transforming entire industries. 

“Even companies and governments that don’t directly use quantum computers will see benefits, from more effective medications to more environmentally sustainable construction materials.”

Quantum computers make use of the properties of quantum physics, which allow particles to exist in multiple states at once, enabling computers that use quantum particles to perform certain calculations exponentially faster than binary computers.

“A quantum computer of sufficient size could solve a problem in hours to days that would take even the most powerful supercomputer of today centuries to solve,” Nedbank explained.

Put simply, the bank said that quantum computing provides computing power for data computations that are not possible for conventional computers due to the complexity and magnitude of the information.

According to McKinsey, the automotive, chemical, financial services and life science industries, among others, could potentially gain more than $1 trillion (R18 trillion) in value by adopting quantum computing over the next 10 years.

“Investments in the field are often coupled to investments in companies specialising in superconductor technology,” Nedbank explained.

“This is a relatively new technology trend, so you’d need to assess the long-term potential of any investment carefully.”

Superconductors

“Without any resistance, superconductors can transmit electrical energy in a lossless fashion, leading to the holy grail of energy efficiency,” Forbes explained.

“Innovations in superconductors have ushered in a new era of technological advancements, transforming various industries from energy to computing,” Nedbank said.

The development of room-temperature or high-temperature superconductors is particularly exciting because they operate at more accessible temperatures, making them more practical for everyday use.

“Superconductors in quantum computers enable the creation of more efficient, more scalable quantum processors,” the bank said. 

In the energy sector, superconducting cables are revolutionising power transmission by enabling the transfer of vast amounts of power over long distances with zero electrical loss.

Superconducting magnets are also enhancing the performance and efficiency of medical imaging technologies like MRI machines, as well as transportation systems such as maglev trains. 

“These innovations reflect the growing potential of superconductors to reshape technology and contribute to a more sustainable, efficient, interconnected world,” Nedbank said.

Renewables and climate technologies

“Electrification and renewable energy are becoming increasingly urgent in the global commitment to net-zero emissions to combat climate change,” Nedbank explained.

“If you are looking to invest in a forward-looking, healthy sector for new technologies and companies, you have a choice of solar-, wind-, and hydro-powered renewables, as well as nuclear energy, sustainable fuel companies, and electric vehicles and the technologies to charge them.”

Beyond renewable energy, there are opportunities to invest in companies focused on climate technologies like carbon removal and storage, alternative proteins and agriculture, and solutions for water and biodiversity.

PwC’s fourth annual State of Climate Tech report found that investment in climate tech start-ups has seen a decline in recent years, reflecting broader market challenges. 

Despite this, there has been a positive shift in directing funds toward high-emission sectors, such as industry and manufacturing, where innovative solutions can have a significant impact on global emissions.

Investors should consider the need for substantial capital beyond venture funding to scale up these technologies and achieve meaningful climate impact. 

The current market presents opportunities to support companies that are not only innovative but also capable of reaching profitability and scaling effectively. 

As climate tech continues to evolve, investors who can identify and back high-impact solutions in these sectors stand to play a vital role in driving global decarbonisation efforts.

“The more value the world places on climate action, the more opportunity there will be for investors who are at the frontier of innovation,” PwC said.

This article was first published by Daily Investor and is reproduced with permission.