Dear Reader,
Even during times of market pullbacks, there are always sectors that are setting records.
Yesterday, we touched on how inflation is directly impacting discretionary spending. Naturally, this reduces the amount of goods and services that consumers – at large – will purchase. As this consumer demand decreases, prices follow in step, which actually helps to reduce inflation.
But this kind of slowdown in the market doesn’t negatively impact all sectors.
One of the most resilient sectors this year has been any business associated with data centers. Data centers are part of the backbone of the internet. They are where data and software are stored, and software programs are run in the “cloud.”
The cloud might seem like an abstract term, but it simply means that the software or applications that we are using are simply running on a computer server at some unknown offsite location. That’s it.
And that business is booming.
Semiconductor companies like Taiwan Semiconductor Manufacturing (TSMC), Advanced Micro Devices (AMD), and NVIDIA haven’t seen any reduction in orders this year for semiconductors that are used for data center applications.
Major cloud service providers like Amazon Web Services and Google Cloud continue to invest in building more storage and compute capacity. The reality is that if they don’t, they’ll be putting themselves at a competitive disadvantage.
And what this tells us is, that despite the current economic conditions, the shift toward using more and more digital services hasn’t slowed down a bit.
Whether it is cloud-based software for enterprise applications, content distribution networks for consumer applications, streaming services, social media applications, or online gaming, it really doesn’t matter. It is all growing at very strong, double-digit rates.
For perspective, the hyperscale data center market is growing into an estimated $585 billion market by 2030… and I suspect current forecasts are too conservative. That compares to just $59 billion in 2020.
AMD has been a real standout in the data center market. Its GPUs are used for gaming and artificial intelligence (AI) applications, and its CPUs are used to power computer servers. Last year, AMD grew its CPU server market share to almost 11%, stripping away more market share from Intel for 11 consecutive quarters in a row.
That may not seem like a lot, but this is a market that Intel has “owned” for decades. It takes time to “retire” older, inefficient servers from data centers, but AMD has been unseating Intel one quarter at a time.
More impressive is that AMD’s total market share for CPUs has now grown to more than 25%. That includes CPUs used in servers, computers, and gaming consoles. AMD has been dominating Intel on every front and continues to release new products that tend to be at least 12 months ahead of anything Intel is capable of doing.
No matter the market conditions, there will always be sectors in a bull market. And there will always be companies that are driving the growth.
AMD has been a real standout in the data center market. Its GPUs are used for gaming and artificial intelligence (AI) applications, and its CPUs are used to power computer servers. Last year, AMD grew its CPU server market share to almost 11%, stripping away more market share from Intel for 11 consecutive quarters in a row.
It’s also how we profit in these services. As we can see, the semiconductor industry has as much business as it can handle these days. And with the chip shortage we’ve been seeing, these companies stand to benefit for the foreseeable future…
There’s incredible momentum in this space… and I’m helping my readers invest in the best companies that will meet this need. To learn about my top semiconductor recommendations, you can go right here.
Consumer electronics company Dyson is going in big on home robotics…
I suspect many readers are familiar with Dyson. This company makes some of the best vacuum cleaners in the world, thanks to Dyson’s tech-focused approach.
Despite all its success, Dyson is still a private company. So we don’t always know what’s going on in the background.
That’s why it was a surprise when Dyson announced that it was working on an electric vehicle (EV) years ago. We talked about that way back in May of 2019.
And this came on the heels of Dyson’s acquisition of solid-state battery company Sakti3. Dyson planned to use Sakti3’s batteries in its EVs.
Sure enough, Dyson built an absolutely beautiful car.
But the problem was that its design cost $182,000 to manufacture. And Dyson realized quickly that there’s simply not a very big market for EVs in that price range. So they scrapped the EV project altogether.
However, there is good news…
Dyson just announced that it has hired about 2,000 new employees this year, half of which are engineers and coders. And Dyson is still looking to hire another 700 people or so.
And get this – all of these new employees will help build robotics systems for common household tasks.
Dyson quickly pivoted its EV efforts into a new consumer robotics division. This is a great development. I suspect that Dyson will still be able to use Sakti3’s battery tech for robots rather than EVs.
The fact that Dyson is making so many external hires during this period of economic uncertainty is telling. Clearly, the company believes that there is a big market for butler-like home robots.
To me, Dyson is the perfect company to go big into this area. Household consumer products are its bread and butter. And Dyson has always been heavy on tech, which has been a fantastic complement to its appealing design aesthetics.
Here’s an early look at its home robots in action:
Dyson Robot
Source: The Guardian
As we can see, Dyson wants to make the Jetson-esque robot butler a reality. It wants to produce robots capable of doing many different household chores.
I’m very excited to follow Dyson’s progress.
As a company, Dyson has the right makeup to produce highly functional and well-designed robots for the home. As we’ve been exploring a lot lately, the combination of advancements in computer vision, robotics, and artificial intelligence are making these kinds of products a near future event.
Yet another exciting development from Niantic… The gaming giant just held its first ever developer conference, where it announced a new product that’s a precursor to its larger augmented reality (AR) rollout.
We have talked about Niantic quite a bit recently. For the sake of new readers, this is the company behind Pokémon Go – the game that pioneered the concept of AR gaming.
And Niantic’s new product strengthens my belief that it will launch full-scale AR eyewear later this year. It’s an app called Campfire.
Campfire is a social network-like service that helps AR gamers connect with one another. A visual will help us understand why this is so important:
Niantic’s Campfire App
Source: Niantic
Here we can see that Campfire uses a phone’s GPS to help people organize AR meetups. This ties in directly with Niantic’s approach to the metaverse.
As a reminder, Niantic doesn’t subscribe to the idea that the metaverse is a virtual world that we access exclusively through a screen.
Instead, it sees the metaverse as an augmented overlay on the real world… using AR to enhance the world we already interact in every day.
So to play AR games together, people need to be in the same physical location. That’s what Campfire is all about.
And it’s important to note that there is precedence for this. Discord became a popular chat application specifically because it helped gamers link up with each other to play games. Campfire is acting like Discord for AR gamers.
We can also see that Campfire provides a messaging system directly in the app as well. This allows players to easily coordinate with friends. And it even helps people find strangers in their local area who are looking to play AR games.
Now think about this – all AR gaming right now happens on smartphones. There isn’t a dedicated device on the market.
The fact that Niantic is rolling out Campfire now suggests that it is very close to launching its own AR eyewear and corresponding AR games. In fact, this is exactly what Apple does – launches development platforms and supplemental apps ahead of major product launches.
So we can expect to see some exciting announcements on the AR front later this year from Niantic.
And many of the big names like Niantic and Apple are going to need one critical company to help produce their headsets… That’s one way my readers are going to profit from this trend. To learn more about it, simply go right here.
We talked yesterday about how Andreessen Horowitz is raising an incredible $4.5 billion to invest in cryptocurrency projects. That’s a clear signal that private capital is not at all concerned about the current pullback we have seen in the crypto markets.
Well, we just got another strong signal.
Amidst all the market volatility, blockchain project Starkware just raised $100 million in its Series D venture capital (VC) round. This values the company at an impressive $8 billion.
The valuation itself is incredible… But even more impressive is that Starkware was valued at just $495 million in June of last year. That means the company’s valuation has increased 16X in the last 12 months.
The fact that this raise happened despite the current downturn in the crypto markets makes the deal even more telling.
Obviously, it takes months to put together a large $100 million deal like this. Investors had the chance to call it off… but they didn’t. That’s bullish for the crypto markets looking forward.
To me, this is a perfect example of what’s happening in the industry. There’s still an abundance of private capital out there. It’s just being allocated to the most promising projects.
I am seeing this from my own experience as well. Both VCs and investors are simply being more selective about which projects they are funding. The most attractive and promising projects are still getting funded just as quickly as before.
And Starkware certainly fits that bill.
Starkware is known for what’s called “ZK-rollup” technology. This tech is meant specifically to help layer one blockchain Ethereum (ETH) scale.
It does this by taking a large number of Ethereum transactions and rolling them up on a Layer 2 blockchain. Then it compresses those transactions and writes them back onto Ethereum’s blockchain.
This does two things.
First, it allows for a lot more Ethereum transactions to occur at the same time. That’s because the transactions that Starkware’s tech “rolls up” don’t get written to the Ethereum blockchain right away. This ensures there is plenty of space for other transactions.
Second, this process reduces transaction costs. And as anyone who has recently used Ethereum knows, that’s been a big challenge. Ethereum’s gas fees (fees for any transaction) skyrocketed this year.
At one point, the average cost to send ETH from one wallet to another was more than $50. And the cost to do a more complicated financial transaction could be more than $200. Even as I write, those costs are between $5 and $20, respectively.
Starkware’s tech will help get these transaction costs back down to reasonable levels. And that will be instrumental in helping Ethereum scale.
So our takeaway here is that we are likely to see the crypto markets recover sooner rather than later. The downturns are more compressed than they used to be. Private capital continues to pour in, and the top projects continue to build.
Regards,
Jeff Brown
Editor, The Bleeding Edge
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The Bleeding Edge is the only free newsletter that delivers daily insights and information from the high-tech world as well as topics and trends relevant to investments.
The Bleeding Edge is the only free newsletter that delivers daily insights and information from the high-tech world as well as topics and trends relevant to investments.