I can almost smell it… Fall is just around the corner. We’re in the final stretch, with just two more weeks of summer to go.
And while I absolutely love autumn, my anticipation is much more technology-focused. My excitement is centered on developments in 5G wireless technology and the results from the first human clinical trials using CRISPR genetic editing technology.
We are already seeing the positive impact of 5G wireless network spending in the earnings announcements of technology companies in the space. There is no question about it – a strong pattern is developing… a leading indicator for quarter after quarter of strong results.
We should remember that 2019 is the first major year of spending on 5G network infrastructure. And this trend will run for a few years. All investors should be positioned to benefit from this massive infrastructure build-out… the single largest communications infrastructure build-out in history.
(Precisely how should investors get positioned for the 5G build-out? I’ll answer that question and more during my free 5G investment summit on Thursday. Details here.)
And in the weeks ahead, we’ll start to hear about the results from the CRISPR trials… Already some positive news leaked out about one beta thalassemia patient who has gone four months without a blood transfusion after receiving the CRISPR treatment. This compares to previously needing one every 2-4 weeks. All I can say is… it’s working.
That’s why I’m excited about the fall. The tech world is booming, and we have some incredible news to look forward to.
Now, on to our insights…
The first computer that can simulate the human brain…
Just last week, supercomputer company Cray won a $600 million contract from the U.S. Department of Energy (DOE). The job? Build an exascale supercomputer that can make at least one quintillion calculations per second.
For reference, one quintillion is one followed by 18 zeros. It’s one billion billions. We can’t even wrap our heads around how large that is.
Cray is calling its new supercomputer El Capitan. It is scheduled to launch in 2023. And at those speeds, El Capitan will be seven times faster than the world’s current top supercomputer, Summit, which was launched last year. What’s more, El Capitan will be more powerful than the top 100 fastest computers in the world combined. Wow.
This is a massive jump in computing power. In fact, El Capitan will be powerful enough to simulate the human brain. And that will change our world forever…
And the DOE needs this computing power for national security – more specifically, to create 3D simulations for national defense… We can think of the system as a modern version of the 1983 movie WarGames.
Model of El Capitan
Source: Department of Energy
We are entering the age of exascale computing.
Cray and Intel also are designing Aurora. It will be the country’s first exascale supercomputer, with its launch in 2021. Though less powerful than El Capitan, Aurora will also be able to make one quintillion calculations per second.
These systems will be used to run artificial intelligence (AI) that can solve highly complex problems. They will be used to build quantum models… optimize the folding of proteins for medical advancement… and even analyze the origins of the universe.
And Cray’s DOE contract comes at an interesting time. Hewlett Packard Enterprise (HPE), once a leader in computing and storage, just acquired Cray for $1.3 billion in a desperate move. HPE’s annual revenues have been flat or declining since 2016, and the stock is at exactly the same level it was back in September 2016.
This is what the old dogs of technology do… They try and buy revenue… And it usually doesn’t go very well.
Yet the size of Cray’s DOE contract is $600 million. That means it’s worth nearly half the enterprise value of HPE’s acquisition. It won’t move the needle for HPE, but it is a massive deal for Cray.
The cybersecurity IPO at the top of my watchlist…
Cybersecurity company Cloudflare just filed to go public. This is a company that I’ve been watching for years. It’s been around since 2010… And it’s one of those companies that most people have never heard of. But we interact with its technology every day.
Get this… Cloudflare is now used by more than 20 million websites. Chances are high that we visit several of those websites every day. It’s just that Cloudflare is in the background. It protects these websites from cyberattacks, keeping them up and running.
To protect so many websites, Cloudflare has built 193 data centers around the world. These data centers help deliver content for Cloudflare’s customers safely and securely. They make sure consumers can access these 20 million websites 24/7.
So Cloudflare built out a massive internet infrastructure as a private company. And the number of customers it supports is eye-popping. That’s why I’ve tracked this company closely for the past several years.
And Cloudflare has strong venture capital backing. It raised about $332 million in venture capital from some of the world’s top venture capitalists (VCs): Union Square Ventures… New Enterprise Associates… even Venrock, the VC arm of the Rockefeller family.
Given this level of investment, Cloudflare was last valued at $3.2 billion. That means we can expect it to go public at a multibillion-dollar valuation.
And the company is still growing like crazy. With nearly $200 million in revenue last year, the company has more than doubled its revenue in just two years. Very exciting growth.
So Cloudflare checks a lot of boxes. This company is definitely at the top of my watchlist.
Ripple just made another big move…
Ripple’s at it again…
Readers will know Ripple as the blockchain-based money transfer company. It built a platform for international money transfers using Ripple’s cryptocurrency, XRP.
If we remember, Ripple Labs invested in MoneyGram back in June. It was a strategic deal that required MoneyGram to adopt Ripple’s technology and XRP for international fund transfers. It was a great move for Ripple.
Well, just last week, Ripple invested in a platform called Coil. This is a platform that allows content producers to receive micropayments for their work. Let’s put this into context…
An online subscription to The Wall Street Journal costs about $450 per year. That’s just to read articles online… No paper comes to you. So it’s not cheap. And even after paying $450 a year, we still get bombarded with advertisements.
Yet the average subscriber reads only about 1% of the content they paid for. That’s just not a good deal for the consumer. Why pay so much for content you won’t read?
More and more people are asking that question… And that’s one reason why big media companies are struggling today.
And that’s where micropayments come in. Instead of paying $450 per year, why not just pay for the content you read? After all, how many people will be willing to pay $450 a year for The Wall Street Journal? A different business model would drive higher utilization across a dramatically larger consumer base.
This idea of paying only for consumption has been discussed for a long time. But technology hadn’t yet developed to enable this. After all, consumers won’t want to enter in credit card information every time they read an article… just a five-cent transaction.
And micropayments aren’t only for online articles. Music, movies, TV shows, and any other content delivered digitally can operate on micropayments. And blockchain technology can make these microtransactions possible.
So Ripple invested in Coil’s $4 million seed round and is now granting Coil 1 billion XRP – roughly $265 million – to help launch Coil’s networks. And XRP will be the currency used for micropayments on the platform.
This is a bold move. It takes guts to try to make a new business model like this successful. And I believe that these kinds of micropayments are the future of content consumption. They enable consumers to have access to content that is essentially out of their budget right now.
Also related, this is the same model Brave is using to make Google obsolete. We talked about this back in April. Well, Brave now facilitates micropayments on Twitter in the form of tips.
The Tip Button on Twitter
If consumers really like, get value from, or benefit from a tweet, they can send a small tip to the producer.
Perhaps we should enable this feature in The Bleeding Edge? After all, just like a tweet, it’s free!
Editor, The Bleeding Edge
P.S. We’re fast coming up on my free 5G investing summit, The Final Phase of the 5G Boom.
We’ll host the summit on Thursday at 8 p.m. ET. That’s when I will reveal my method for picking the most explosive small-cap 5G stocks. I’ll also fill you in on one of the most promising 5G stocks on my watchlist today.
I’ve been pounding the table on 5G for nearly two years now. I know at this point that 5G is a buzzword… But let’s not forget that this is the largest private infrastructure project in U.S. history.
And as I have explained since day one, the 5G boom will come in three phases. Phase 1 and 2 are underway right now. They have each progressed tremendously this year. And now we are about to enter Phase 3…
Phase 3 is the most explosive phase by a wide margin. With Phase 3, the 5G groundwork has been done… The foundation has been laid… And the stage has been set. All that’s left is the performance. Phase 3 is when people stop hearing about 5G and start seeing it. Only then do they really get a sense for how much their world is about to change thanks to this technology.
And, of course, any time you have a world-changing tech, you have world-changing investment results. That’s what Thursday is about. I can tell you right now – there are a handful of tiny tech stocks that will gain 1,000% or more thanks to Phase 3 of the 5G boom. Investors stand to make 10 times their money on each of these stocks.
We’re talking life-changing gains… And that’s why I am so excited about Thursday night. I am thankful for all my readers who join me at The Bleeding Edge every day. It’s you who make my work so rewarding. And Thursday night is my chance to give back.
Please reserve your spot here. We’ll go live at 8 p.m. ET on Thursday. I’ll show you my strategy for pinpointing the most explosive small-cap 5G stocks. And I’ll give you the name of my No. 1 5G watchlist company. As always, no strings attached.
Hope to see you there.