Welcome to our weekly mailbag edition of The Bleeding Edge. Let me start by saying thanks to everybody who joined me at the Legacy Investment Summit this week. It was a pleasure meeting and speaking with so many subscribers passionate about the world of high technology.
I tried to answer as many questions as I could in person. But I wasn’t able to get to everybody. So if you missed your chance to ask me a question about my presentation – or if you have another question about the world of technology – be sure you write to me here.
The time to invest in 5G is now…
First up is a question about the 5G wireless rollout and why the best time to invest in quality 5G stocks is now…
Jeff, in previous presentations and correspondence, you repeatedly encourage jumping into companies involved in the 5G rollout. But it sounds like the conversion to 5G will take up to 3–4 years. Just asking for a bit of understanding about the timing of investing in 5G companies.
– Joe W.
Thanks for the question, Joe. It’s true that it will take several years for 5G wireless technology to be as ubiquitous as 4G is today. In fact, one forecast indicates that 5G won’t overtake 4G (in terms of a percentage of mobile connections) until about 2025 – I think it will happen sooner than that, but it will still take a few years.
I’ve shown this chart before. It gives you an idea of how 4G (and even some 3G) connections will be live as the 5G networks are built out.
But to respond to your other question… if it will take years for 5G to be fully built, is it too early to be investing in 5G-related companies? The answer is no.
And the reason is simple. It might take a few years for 5G to be 100% adopted. But companies involved in the 5G rollout have to make decisions for future 5G products right now.
Let’s consider just one example…
We know that Apple will launch its 5G-enabled iPhone in Q4 of 2020. But Apple has to make strategic decisions about what components go into that device right now. And the companies that produce the components needed for 5G iPhones are going to see an increase in order volume in a matter of months. That means higher revenue and share price for these companies. As an investor, if we wait until the 5G iPhone is “real,” we will miss out on those returns. The market will have already priced the increase in new business into the share prices.
(The above example isn’t hypothetical. Earlier this year, I gave a presentation on an essential component that will be needed in the 5G iPhone and every future 5G-enabled device. The company that produces that component is one of the best ways to play the 5G device boom. Catch up here.)
The same is true with companies involved in building 5G network infrastructure. These companies are already beginning to see increased order volume from the 5G build-out.
My mission is to make sure my readers get exposure to the biggest technology trends before they reach mass adoption and the majority of gains are gone.
Joe, I see you’re a subscriber to two of my technology research services, The Near Future Report and Exponential Tech Investor. If you haven’t already, I encourage you to review our 5G portfolios (find them here and here). These 5G companies won’t stay at these levels for long.
How to handle the byproducts of the Eos Bioreactor…
Next is a follow-up question from a story from last week…
Jeff, your piece on AI-driven environmental air purifiers said these bioreactors are full of algae that suck emissions out of the air. I can see where this has tremendous potential, as you stated in your article. However, it also seems to me that this will generate a tremendous overabundance of algae that then needs to be dealt with and/or discarded. Did your research run across thoughts on how to address this issue?
– Robert Y.
Thanks for writing in, Robert. For readers who missed it, last week I profiled an early stage technology company called Hypergiant Industries. Hypergiant developed a prototype of an environmental air purifier called the Eos Bioreactor.
The bioreactor uses algae to pull two tons of carbon dioxide out of the air each year. That’s equivalent to the amount of carbon dioxide absorbed by an acre of trees.
The Eos Bioreactor
Source: Hypergiant Industries
What’s interesting about the Eos Bioreactor is that it uses AI (artificial intelligence) to optimize the “performance” of the algae. That’s how it is able to pull so much carbon dioxide from the air.
Of course, an outdoor version of this device would do wonders for air quality. Imagine hundreds of these machines deployed on rooftops of smog-ridden cities like Los Angeles or Shanghai.
Robert, you’re correct. This method would create excess algae that would have to be managed. Fortunately, there are plenty of uses for this algae.
When algae absorb carbon dioxide, they can then be converted into something called “algae oil.” Algae oil can be burned as a source of energy. It can be used as a cooking oil. And it can also be used to create cheap carbon fibers.
These algae-based carbon fibers could, in theory, be used to create materials for everyday products like tennis shoes or shampoo bottles. They could even be used to create a steel alternative. And believe it or not, algae can even be used in cosmetics.
So the byproduct of the Eos Bioreactor isn’t an impediment to this technology. It could even prove to be a viable source of raw materials. I’ll keep a close eye on this trend as it continues to develop.
Technological progress marches on…
Let’s conclude with a very common question I get from readers…
Hi Jeff, if the U.S. goes into a major slowdown or recession in 2020, how do you think this may affect the rollout of 5G and AI?
– Beth B.
Thanks for writing in, Beth. As I wrote recently, I remain bullish on the broader stock market through the end of the year and into 2020.
For one, the American economy has remained resilient while other parts of the world face economic troubles. The recent decision by the Federal Reserve to cut rates was another step in the right direction. And the Fed Chair Jerome Powell signaled his willingness to cut rates further if the need arises.
But purely for the sake of argument, let’s assume the U.S. does experience an economic slowdown. Will that impact the rollout of 5G or AI technologies? Absolutely not.
I mentioned this during my presentation at the Legacy Investment Summit in Carlsbad, California. Bleeding-edge technology marches on, regardless of inverted yield curves… monetary policy… or even recessions.
In the case of 5G, these wireless networks are essential to maintain America’s communication networks in the face of data traffic that continues to experience exponential growth. And at a national level, the U.S. sees this revolutionary communications infrastructure build-out as a matter of critical importance… not just for driving economic growth and competitive advantage but also a matter of national security.
And the amount of private capital being invested in early stage technology companies will ensure that technological development in this space continues no matter what is happening in the broad markets. We should also remember that the adoption of AI by corporations reduces costs and increases productivity. It is hard to argue against that in any economic environment.
Individual companies involved in these technologies might experience lower valuations during an economic downturn, but it will not slow down the progress of rolling out 5G and AI technologies. And when an economic market recovers, valuations quickly expand to reflect the more positive economic environment.
Editor, The Bleeding Edge