What You Need to Know
- Each year Ark outlines its Big Ideas for investing.
- The 15 ideas focus largely on disruptive technology and impacted industries.
- This year ideas range from Bitcoin to cancer breakthroughs to electronic vehicles, and more.
As the firm states in its report: “ARK aims to identify large-scale investment opportunities by focusing on who we believe to be the leaders, enablers, and beneficiaries of disruptive innovation.”
Focused on technology in its investments, Ark also states that it hopes to “gain a deeper understanding of the convergence, market potential, and long-term impact of disruptive innovation by researching a global universe that spans sectors, industries, and markets. Today, we are witnessing an acceleration in new technological breakthroughs.”
In 2021, here are the 15 areas the firm sees that potentially have long-term growth, and of which it is investing.
1. Deep Learning
What Ark believes “could be the most important software breakthrough of our time” is a form of artificial intelligence that is turbocharging the industry. Firm research sees deep learning adding $30 trillion to the global equity market capitalization during the next 15 to 20 years. “We believe that state-of-the-art AI training model costs are likely to increase 100-fold from roughly $1 million today to more than $100 million by 2025”.
2. Reinventing Data Centers
ARM, RISC-V and graphics processing units (GPU) likely will become the new powerhouse processors and together could scale at a 45% annual rate to $19 billion in revenue by 2030. In data centers, these GPUs likely will become dominant processors for new workloads and experience yearly demand growth of 21%, putting the market at $41 billion by 2030.
3. Virtual Worlds
Computer-simulated environments, such as video games, can be accessed by anyone at any time. Going forward, these virtual worlds will become interoperable. Ark sees revenue from virtual worlds compounding 17% annually and hitting $390 billion by 2025. In-game purchases could grow from $130 billion in 2020 to nearly $350 billion by 2025.
4. Digital Wallets
Venmo, Cash App and others could become the new bank branches — and upend banking models. By 2025, a consumer’s digital wallet could grow from a base of about $1,900 today to $20,000. The number of digital wallet users in the U.S. already surpasses the number of deposit account holders at the largest financial institutions.
5. Bitcoin’s Fundamentals
The cryptocurrency has hit all-time highs, with firms like Tesla and Square investing in it. This shows that Bitcoin is playing a role as corporate cash, the firm says. Ark notes that if all S&P 500 companies were to allocate 1% of their cash to Bitcoin, its price could increase by $40,000.
6. Bitcoin: Preparing for Institutions
Ark sees Bitcoin’s risk-reward profile as “the most compelling” among assets, noting it could scale from roughly $500 billion now to between $1 trillion and $5 trillion in 10 years. More firms are buying it; insurance giant MassMutual invested $100 million into Bitcoin in 2020.