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The Second Machine Age Hits The Tipping Point


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Robots working on an automotive assembly line.

Artificial intelligence, robotics, and industrial software are rapidly approaching a tipping point, according to Morgan Stanley.

Credit: Morgan Stanley

  • Technology investment is now transitioning from the consumer world to the enterprise world as traditional technology and software companies focus on industrial opportunities.
  • This "Second Machine Age" centers around six developing technologies: Artificial Intelligence Software, Autonomous Vehicles, IoT Hardware, Industrial Software, Robotics and Semiconductors.
  • These technologies combined could see annual growth of 17%, growing from $738bn in 2018 to $2.2trn by 2025, with the highest growth coming from AI Software (42%), Autonomous Vehicles (40%), and IoT Hardware (21%). 

Many of the biggest ideas in technology over the past decade have centered on how people communicate, consume, transact and travel. Over the next decade, however, the most profound innovations—and investment opportunities—could be on factory floors, in operating rooms, at mining sites and energy facilities.

The world's economy is in the early stages of a Second Machine Age—sometimes called a "Fourth Industrial Revolution"—an explosion of new digital technology poised to transform manufacturing and industry as dramatically as the steam engine or telegraph.

"The current pace of technological change is breathtaking," says Ben Uglow, Morgan Stanley's head of research for the Capital Goods Industry. "This is not a vague concept that may happen one day in a hypothetical world. It is very much here and now, as real dollars are being committed, with tangible benefits in efficiency and productivity."

In their newest report, Investing in the Second Machine Age—Picking the Winners, Uglow and his research colleagues take an in-depth look at the six most relevant technologies—artificial intelligence software, autonomous vehicles, Internet of Things (IoT) hardware, industrial software, robotics and semiconductors—and identify companies best positioned to capitalize on this theme.

 

From Morgan Stanley
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