The Convergence of Innovative Platforms: Insights from ARK's "Big Ideas 2023" Report

ARK's "Big Ideas 2023" report is a 153-page analysis of new technologies and trends. While one may disagree with their investment strategy, it is worth noting the insights it provides into 13 major innovation areas. Due to the breadth of content, we will summarize some key points, but we encourage readers to check out the report for more details. Download: https://research.ark-invest.com/hubfs/1_Download_Files_ARK-Invest/Big_Ideas/ARK%20Invest_013123_Presentation_Big%20Ideas%202023_Final.pdf

The report predicts that tech stocks will account for the majority of the stock market's value. The five major innovative platforms (public blockchain, AI, multi-omics, energy storage, and robotics) are converging to create unprecedented growth. AI is the most significant catalyst, and the market value of disruptive innovation platforms is expected to grow at an annual rate of 40%, from $13 trillion today to $200 trillion by 2030.

AI-generated text is expected to improve the productivity of knowledge workers, as the cost of AI training continues to decline at a rate of 70% per year. The cost of training a large language model to the level of GPT-3 is projected to fall from $4.6 million in 2020 to $450,000 in 2022. By 2030, AI is expected to increase knowledge workers' productivity by more than four times. If AI were to be adopted 100%, the global labor productivity could increase by about $200 trillion.

Digital wallets, which already have 3.2 billion users and have penetrated 40% of the global population, are expected to continue to grow at a rate of 8% per year, with a projected penetration rate of 65% by 2030. This will disrupt traditional payment intermediaries such as checks, credit cards, and debit cards. Digital wallets eliminate intermediaries and promote closed-loop transactions. By 2030, the enterprise value of digital wallet companies could increase by $450 billion on top of the current $1 trillion.

Despite a tumultuous year, Bitcoin's network infrastructure has been strengthened, reinforcing its value proposition of decentralization, auditability, and transparency. Over the next decade, the price of Bitcoin could surpass $1 million. Public blockchain will continue to drive currency, financial, and internet revolutions. The market value of cryptocurrency and smart contracts could reach $20 trillion and $5 trillion, respectively, in the next decade.

Precision medicine is developing faster and more economically than traditional therapies. The rapid development of technologies such as AI, DNA and RNA sequencing, CRISPR gene editing, and lab automation has led to breakthroughs in diseases that were previously difficult to treat. Precision medicine has become multi-dimensional, with mechanisms spanning DNA/RNA/proteins, etc. The value of precision medicine companies is expected to grow at a rate of 29% per year, from $500 billion in 2022 to $3 trillion in 2030.

Investors are skeptical about the growth potential of electric vehicles due to commodity price fluctuations resulting in reduced cost reductions. However, based on Wright's Law, the price of electric vehicles will continue to decline, and sales will increase by more than seven times. But the most significant downside risk may come from the continued supply constraints that affect prices and the speed at which traditional car manufacturers transition to electric vehicles.

Autonomous ride-hailing services are currently available in about 15 cities worldwide and will be widely commercialized over the next decade. Autonomous driving technology can reduce the cost of mobility to about 12% of the average cost of human-driven ride-hailing services. Automated logistics, including trucks/drones and robots, will reduce transportation costs and increase convenience. The cost of self-delivery will drop to between $0.20 and $10 per delivery.

Finally, robotics and 3D printing will drive the automation of manufacturing and construction, leading to cost savings, efficiency improvements, and customization of products. The combination of robotics and 3D printing has already been used to produce complex parts and components that were previously impossible or too expensive to make. With the integration of artificial intelligence and machine learning, these technologies will become even more powerful, allowing for more precise and efficient production processes.

In addition to manufacturing and construction, automation and AI will transform other industries as well. For example, the healthcare industry will benefit greatly from the use of robotics and AI to improve patient outcomes and reduce costs. Robotic surgical systems are already being used to perform minimally invasive procedures with greater accuracy and precision than human surgeons. AI-powered diagnostic tools can help healthcare professionals identify diseases and conditions earlier, leading to better treatment options and outcomes.

Another industry that will be transformed by automation and AI is transportation. Autonomous vehicles are already on the road, and they have the potential to reduce traffic congestion, improve safety, and lower transportation costs. In addition, drones and delivery robots are being developed to make last-mile deliveries more efficient and cost-effective.

As these technologies continue to advance and become more widespread, there will be significant changes to the workforce. Some jobs will be automated, while new jobs will be created to support and maintain the new technologies. Education and training will become increasingly important to ensure that workers have the skills needed to succeed in the new economy.

Overall, the integration of automation, AI, and robotics into various industries will lead to increased efficiency, productivity, and cost savings. However, it will also require careful planning and consideration to ensure that the benefits are shared equitably and that the workforce is prepared for the changes ahead.