🧠 Find the Best Stocks With ARK Invest’s Big Ideas 2022

00:00
ark invest's 2022 big ideas report came
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out a week ago and oh boy is it exciting
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and confusing it's exciting because of
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the content and also because of the
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timing last year big ideas came out
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right at the top for growth stocks now
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many of those same growth stocks have
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collapsed by well over 50 percent in
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just the last three months bringing them
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back to pretty attractive valuations
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trust me i get that seeing nothing but
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red in your portfolio can get pretty
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exhausting but with prices down so much
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it's the perfect time to do deep dives
00:28
on the technology trends that arch
00:30
invest believes will lead to exponential
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growth over the next decade one of the
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really interesting things this report
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implies is that traditional wall street
00:37
analysts could start missing the mark
00:39
more and more over the next decade
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because they're not really accounting
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for how these technology trends overlap
00:45
and feed into each other that's
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important because analysts set quarterly
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expectations for earnings per share and
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revenue so if they're not modeling
00:51
things correctly these innovative
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companies should keep surprising
00:55
relative to those expectations
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okay if you're warren buffett or if
00:58
you're jimmy buffett nobody knows if the
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stock is going to go up down sideways or
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in circles at least of all stock brokers
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that's exciting but if analysts have a
01:07
hard time calibrating their estimates it
01:09
could also be a bumpy ride for growth
01:11
stocks not just a smooth exponential
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curve straight up that will be confusing
01:16
which kind of makes this research and
01:18
building your own convictions even more
01:20
important the report itself is also very
01:22
confusing first of all this big ideas
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report is very different from the
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previous years in some places they use
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2021 numbers and in others i think they
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stick with 2020 numbers there are
01:32
inconsistencies in scales from side to
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side so i have to be resizing graphics
01:37
to make the presentation self-consistent
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it's actually really important for me to
01:41
get these fixes right because everything
01:43
they present is in logarithmic scales so
01:45
these little differences mean big errors
01:47
on my end if i get it wrong on top of
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that they're using the same terms in
01:51
different ways for example artificial
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intelligence is one of the five
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innovation platforms it's one of the 14
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disruptive technologies and it's one of
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the 14 big ideas so this episode is an
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intro to help investors understand and
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get the most out of the entire
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presentation at least at a high level
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then as i solve these challenges i'll
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cover each of the big ideas in a
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separate episode and link them to the
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specific stocks that arkanvest holds
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inside their funds feel free to
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subscribe to the channel and turn on
02:17
notifications if this kind of investing
02:20
oriented research and analysis is
02:21
interesting to you this introduction
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episode has three parts first i've put
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together a super cut of kathy woods and
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brett winton's introductions to the
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report i've cut out all of the ums and
02:31
the uh stripped out all of the fluff and
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kept only the stuff that really focuses
02:35
on the stock and cryptocurrency markets
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i think it's important to hear as much
02:39
as we can straight from the source but
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timestamps are enabled if you want to
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skip around after the supercut i'll help
02:45
clarify how to use the report for your
02:47
own investing research so if you're
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scratching your head because the big
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ideas don't match the 14 technologies or
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you're not familiar with this whole idea
02:54
of the convergence stick around to the
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end and i'll explain it for you your
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time is valuable so let's get right into
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it starting with the super cut i believe
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we have the best research on innovation
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in the industry the research is the
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courage of our conviction now i know and
03:13
and i completely understand what
03:15
investors are going through today given
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all the fear uncertainty the doubt the
03:21
volatility volatility is not always a
03:24
bad thing a year 18 months ago
03:27
volatility on the upside
03:30
was a beautiful thing uh but uh
03:33
volatility on the downside is painful it
03:36
is important to keep a long-term
03:39
investment time horizon when you're
03:41
investing in innovation i have never
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seen
03:45
innovation on sale the way it is today
03:48
this disconnect will not last we are in
03:51
prime time this is no longer a dream
03:54
and we think it's critically important
03:57
that investors get on the right side of
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change
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because during the next 10 years
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we believe disruptive innovation in the
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public equity markets will scale
04:10
at a 30 percent annualized rate from
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roughly 10 to 15 trillion now to more
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than 200 trillion uh in 2030 and the
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rest of the market uh we believe is
04:24
going to be hit by something called
04:26
creative destruction the destruction
04:29
caused by disruptive innovation as it
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disintermediates and disrupts the
04:34
existing world order and so now i'd like
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to introduce brett winton our director
04:40
of research it really is a unique time
04:43
in technological economic history so i'm
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happy to share with you uh our big ideas
04:48
2022.
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one of the things that that we've
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noticed in particular over the last six
04:54
and 12 months is the degree to which the
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innovations we're focused on are
04:58
converging the the way in which ai is
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feeding into genome sequencing
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blockchains in the consumer space kind
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of the convergence of technology is is
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is where a lot of exciting um
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opportunities lie both because there's
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likely to be more misunderstanding there
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and you you can get these compounding
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effects where you have an s-curve
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building on top of an s-curve and the
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overall opportunity set for a set of
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businesses can amplify
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there are five innovation platforms that
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we focus on
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ai
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energy storage or battery technology
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blockchain in particular public
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blockchains robotics and then
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dna sequencing or i think of it as gene
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read write this is the composite
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forecast of the 14 technologies that we
05:44
focus on in that aggregate market cap
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appreciation that we anticipate accruing
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across each of these five technologies
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as you can see the rate of growth is
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very high not only that this suggests
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that the market cap attributable to
05:58
innovation will exceed meaningfully the
06:02
uh market cap attributed to other
06:04
businesses over the next decade then
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from a allocation perspective you're
06:09
better off being in front of that wave
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than waiting for it to occur
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collectively these five technology
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platforms we expect to accrue over 200
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trillion dollars in value over 10 years
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this uh highlights the the 14 underlying
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technologies that that fit under these
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platforms each technology is discretely
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modelable but there is also important
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dependencies between the technologies
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you one of the reasons to be optimistic
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about robo-taxi and the economic value
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that robo taxis can deliver is because
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of the fundamental innovation happening
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in the aim neural net space
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this is how kind of a visualization of
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how the asset value accrual will break
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down again you can see that each of
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these technologies against which we have
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defined a cost declined curve and done
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unit economics cases for in buyers are
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experiencing steep cost declines they
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also cut across sectors which is an
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important characteristic so i'll spend a
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moment on each technology platform
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within the ai space we expect that
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artificial intelligence and the
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associated technologies will yield more
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than 100 trillion dollars in market
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capitalization by 2030. there's mobile
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connected devices here that includes
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expectations for augmented reality
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headsets and the constellation of design
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devices that you wear on your person
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cloud computing is um kind of the
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infrastructure as a service layer that
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that gives us access to a super computer
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in our pockets from any connected device
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as a response to the demand for ai we
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think there's going to be a meaningful
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increase in and compute hardware spin to
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support it uh exceeding a trillion
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dollars internet of things is fixed
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connected devices so the smart speakers
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the smart tvs and you can think of this
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as this is the media retail space that
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lives inside your home that allows you
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to frictionlessly buy things through
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e-commerce platforms and frictionlessly
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access media and potentially you know
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public blockchain web three assets uh
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and of course ai itself and this drives
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a lot of the value accrual expectations
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here the value accrual is predicated on
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the fact that
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the advances in ai suggests that it's
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not going to be considered artificial
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intelligence but instead augmented
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intelligence where every knowledge
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worker will become more productive every
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software engineer will become more
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productive and the
08:30
productivity value that we anticipate
08:32
spilling off ai will actually
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meaningfully exceed the the revenue that
08:36
ai software companies will capture
08:38
within the battery technology space this
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is where we capture both energy storage
08:42
opportunities as well as autonomous
08:44
mobility autonomous mobility and robo
08:47
taxi in particular we believe is going
08:49
to be the
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most economically productivity
08:53
generating innovation of all time the
08:56
logic is relatively simple we spend 700
08:59
to 800 billion hours driving a year as
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amateur drivers and so if you can
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displace that people will happily pay to
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be driven around and you end up with
09:09
this economic value creation of the
09:10
freed up time on the battery technology
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side it's interesting it seems as if the
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automotive space is being priced as if
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the pricing structure of selling cars
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will not transform
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and as if every single competitor is
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going to trend towards tesla like
09:27
margins on their ability to produce
09:29
electric vehicles we think that's
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probably misguided it's hard to imagine
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autonomous mobility services coming into
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play without dramatically changing the
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unit cost of the vehicle and the form
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factors that will be sold into the
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market and so tread carefully there
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within the robotic space this includes
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3d printing where you can essentially
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manufacture any part on demand you can
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de-risk supply chains you can get
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complexity for free and you can deliver
09:58
better performance particularly within
09:59
aerospace it includes robotics and we
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have a back-end weighted expectation for
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robotics value accrual it's heavily
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contingent upon continued advances in
10:08
neural nets robotics within the
10:10
manufacturing space can become much more
10:12
flexible and software defined and and
10:15
that would meaningfully increase the
10:16
productivity of of the world of built
10:18
things and then reusable rockets and
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with reusable rockets you have crossing
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two orders of magnitude and cost
10:24
declines of getting things up into orbit
10:27
it seems like the most meaningful
10:29
opportunity here is in in low earth
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orbit satellite constellations
10:33
delivering connectivity but it's still
10:35
in a very early stage as to what's going
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to be realized with that technology
10:38
including potentially hypersonic travel
10:41
around the world and transformations in
10:43
logistics on that basis in the genomic
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space there is amazing convergence
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between these technologies the
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inexpensive gene editing that's been
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delivered by crispr technology
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yields insights and easy experimentation
10:58
which then makes the sequencing
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generating the molecular information
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more valuable which then allows us to
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discover more diseases and disorders and
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the the fundamental molecular basis of
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them which enables us to develop and
11:13
deliver living therapies into the body
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to cure them so this is the technology
11:18
platform that's in its earliest stages
11:20
and it has perhaps the greatest
11:22
potential for providing benefit to
11:24
humanity as we are able to hopefully
11:27
eliminate pernicious diseases and
11:29
finally within the public blockchain
11:31
space we think that this should best be
11:33
understood as three concurrent
11:35
revolutions that have all been catalyzed
11:37
by the introduction of bitcoin into the
11:39
world there's a money revolution which
11:42
bitcoin is positioned to win there's a
11:44
financial revolution which comprises the
11:47
d5 space and everything that's happening
11:50
with smart contracting within the
11:52
financial ecosystem and then there's the
11:54
consumer internet revolution which
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includes all of the experimentation
11:59
going on with nfts including people
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buying digital jpegs for hundreds of
12:04
thousands of dollars the other
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technology that we categorize here
12:08
that's often overlooked is digital
12:10
wallets and you can think of public
12:12
blockchains as tearing apart and
12:14
remaking the back end of the financial
12:17
ecosystem how are assets custody kept
12:20
track of um transferred we believe that
12:22
digital wallets are refiguring the front
12:25
end of financial ecosystems the two
12:28
largest consumer-facing financial
12:30
companies in the us as we think about it
12:33
are not uh traditional banks but venmo
12:36
and the blocks cash app it's actually
12:39
hard to imagine that 10 years from now
12:42
you will be going into bank branches to
12:44
conduct financial transactions we think
12:45
that model doesn't make sense instead
12:48
it's likely that these front-end digital
12:50
wallets that can cross-sell you into all
12:53
kinds of financial services and have
12:55
very low customer acquisition costs and
12:57
become increasingly important if you're
12:59
in a multi-asset world where you're
13:01
transferring in and out of
13:02
cryptocurrencies almost 10 trillion
13:04
dollars in market capitalization
13:06
globally that
13:07
they'll occupy
13:09
so that's an overview of the
13:11
technologies that we cover one of the
13:13
key characteristics that we believe
13:15
differentiates us as a team i think that
13:18
we are well positioned both to
13:20
understand um where technology is going
13:23
and to appropriately model the s-curves
13:26
that can compound on top of s-curves as
13:29
a result of these convergences like i
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said at the start of the episode
13:32
traditional wall street analysts who
13:34
don't think about how all of these
13:36
pieces fit together are going to have a
13:38
tougher and tougher time correctly
13:39
valuing this interconnected puzzle for
13:42
example traditional analysts might keep
13:44
complaining that tesla's market cap is
13:46
bigger than almost every other automaker
13:48
put together but if you were to value
13:50
tesla based on its future scale and
13:52
profitability of its outputs in terms of
13:54
robotics battery technologies and
13:56
artificial intelligence applications
13:58
you'd probably get a much better sense
14:00
of tesla's true valuation so if you see
14:02
wall street analysts changing their
14:04
price targets more and more to chase
14:06
current valuations this could be why
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that's also why ark invest's 2025 price
14:10
target for tesla looks so much different
14:13
from a traditional wall street price
14:14
target the reason arkhanvest has such
14:16
crazy sounding trillion dollar
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projections on many of these slides is
14:20
because of a few things put together
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first these are enterprise values which
14:24
means they're assets plus liabilities
14:27
second these are big families of
14:28
technologies that cut across a lot of
14:30
industries and geographies not just one
14:32
or two companies third these
14:34
technologies are converging so they all
14:36
help unlock costs and capabilities for
14:39
each other the convergence is this idea
14:41
that advanced technologies are
14:42
overlapping more and more for example as
14:45
artificial intelligence gets better and
14:47
cheaper it becomes easier and cheaper to
14:49
teach a car to drive itself it also
14:51
becomes cheaper to program robots
14:53
optimize battery designs sequence the
14:55
human genome and so on but if the human
14:58
genome is cheaper to sequence labs can
15:00
also run more experiments discover more
15:02
proteins and drugs and design more
15:04
custom therapies if that sounds exciting
15:06
to you check out my exclusive interview
15:08
with simon barnett archinvest analyst
15:10
focused on next-generation dna
15:12
sequencing diagnostics and synthetic
15:14
biology it's jam-packed with how
15:16
artificial intelligence robotics and a
15:18
few different areas of genomics are
15:20
converging i'll leave a link to that in
15:22
the top right hand corner of your screen
15:23
right now and in the description below
15:26
as well if you're not modeling the
15:28
change in artificial intelligence
15:29
capabilities and costs over time you're
15:32
going to underestimate all of these
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technologies that artificial
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intelligence enables and all of the ones
15:37
that those enable and so on the same
15:39
thing can be said about cloud computing
15:41
robotics and everything else in this web
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it's all connected the size of each dot
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is how big arc invest expects each
15:48
technology's market cap to be in 2030
15:50
and the size of each connection is how
15:52
much any two technologies affect each
15:54
other so there's a strong relationship
15:56
between artificial intelligence and
15:58
cloud computing artificial intelligence
16:00
and mobile connected devices and ai and
16:02
autonomous mobility all for very
16:04
different reasons which i'll cover when
16:06
i cover these technologies in depth
16:08
likewise there are some surprising
16:09
connections in here how are blockchain
16:11
and reusable rockets connected if we can
16:14
figure this out and find the company
16:15
executing this concept before wall
16:17
street does there could be some serious
16:19
upside here this plot at least gives
16:21
investors the idea for where to look
16:24
here's another point of confusion
16:25
artificial intelligence is one of the
16:27
five innovation platforms archinvest
16:29
focuses all of its research on it's also
16:31
one of the 14 disruptive technologies
16:33
that are converging as a part of this
16:35
chart it's also also the first big idea
16:38
if that makes your eyes cross you're not
16:40
alone let me explain the difference
16:42
between an innovation platform a
16:43
disruptive technology and a big idea the
16:46
five innovation platforms are massive
16:48
families of advanced technologies when
16:50
arkhamvest says that artificial
16:52
intelligence will have a 108 trillion
16:54
dollar market cap in 2030 think about
16:56
all the googles and microsoft's and
16:58
apples and teslas that do work in that
17:00
space banks that use ai to price risks
17:03
pharmaceutical companies that use ai to
17:05
discover drugs robotics companies that
17:07
use ai to go back in time and trigger a
17:09
robot apocalypse uh what's that are
17:11
robot overlords need me to cut that
17:13
robotics companies that use ai to
17:15
optimize production media companies that
17:17
use ai to recommend music and movies and
17:20
on and on and on by 2030 artificial
17:22
intelligence could touch almost every
17:24
aspect of our daily lives these other
17:26
four technology platforms work the same
17:28
exact way these are platforms that many
17:31
technologies across many industries are
17:33
built on top of under the umbrella of
17:35
the artificial intelligence innovation
17:37
platform we have mobile connected
17:39
devices internet of things cloud
17:41
computing and ai
17:43
this ai technology means something more
17:45
specific stocks like palantir and uipath
17:48
are responsible for unlocking some of
17:49
this 85 trillion dollars in knowledge
17:52
worker productivity over the next decade
17:54
and their revenues should scale
17:56
accordingly it's an expanding market how
17:58
much is that market expanding roughly at
18:00
a 26 compound annual growth rate and i'm
18:03
currently working to figure out the
18:05
actual number for the ai technology
18:07
bubble specifically it turns out that
18:09
all five innovation platforms actually
18:11
have a technology bubble with the same
18:13
name and two of those are also big ideas
18:16
the 14 big ideas don't map back to these
18:18
14 technologies one to one if you go all
18:21
the way back to arc invest 2019 big
18:24
ideas you can see that they're meant to
18:25
be new markets that are enabled by these
18:28
technologies overlapping more and more
18:30
autonomous ride hailing is a big idea
18:32
because it's a big market opportunity
18:34
unlocked by the convergence of battery
18:36
technology artificial intelligence and
18:38
robotics if you're looking at the
18:40
current big ideas report it also
18:42
overlaps with 3d printing so all of
18:45
these big ideas are market areas that
18:47
are expected to see exponential growth
18:49
over the coming decade you achieve
18:51
exponential growth by having a fast
18:52
growing business in a fast growing
18:54
market so we should be looking for the
18:56
businesses being built that capitalize
18:58
on these markets today hopefully this
19:01
episode helps you understand the
19:02
structure of arc invest's 2022 big ideas
19:05
report as well as some of the
19:06
differences between the five innovation
19:08
platforms 14 technologies and 14 big
19:11
ideas that were presented here and why
19:14
it's taking me so long to start covering
19:16
it i only release content that i think
19:17
will genuinely add value to the
19:19
discussion after i've done my homework
19:21
so if you want to know when i cover
19:23
these trillion dollar market trends
19:25
consider liking this video and
19:26
subscribing to the channel with all
19:28
notifications turned on that's a great
19:30
way to invest in the channel that
19:31
invests in you until next time stay long
19:34
stay strong and thanks for watching this
19:36
is ticker symbol u my name is alex
19:38
reminding you that the best investment
19:40
you can make
19:42
is in you