What was the defining factor of 2016 for you? Brexit? Donald Trump as US president-elect? Your answer really depends on what directly affected you.
If you have resource stocks in your portfolio, then I’m going to guess you’re happy with how 2016 went.
The S&P/ASX 200 Resources Index has climbed 38.9%, to 3,360.20 points in 2016. This is a solid return for any index. It’s even more amazing when you consider that it came from the 200 biggest resource stocks.
But what will 2017 be the year of?
Make sure you look at this industry
Earlier this month (January 2017), hundreds of thousands of people flew to Las Vegas. They weren’t there to gamble. Instead, they were there for the 2017 Consumer Electronics Show (CES). It’s the biggest trade show for consumer electronics in the world. On show were eye-popping gadgets and breakthrough innovations.
2017 was the best conference so far. Then again, why wouldn’t each year be better than the last? The technology becomes more advanced with every passing year. But it was the best year, in my opinion, because it showed how close we are to self-driving vehicles.
The concept of sitting in a car while it drives you around probably isn’t news to you. Autonomous driving, advanced by a bunch of automakers and tech companies, has come a long way in a short space of time. But I bet you didn’t believe commercial models would be here so soon.
The earliest estimate of a driverless car on the road is next year. NuTonomy, a tech start-up, is planning to bring self-driving taxis to Singapore by 2018. The company has been in business since 2013. And they are currently testing driverless cars in Michigan, US, and in the UK.
But while they might hit the market first, they won’t be the only one. Automakers that aren’t developing their own driverless vehicles are dinosaurs. Almost all automakers you can think of are trying to create a fleet of driverless cars.
Make no mistake; cars won’t just be cars in the future. Transportation won’t just be getting from point A to point B. The idea of moveable space will completely revolutionise our lives. It will even be bigger than when Henry Ford introduced his Model T car.
So who was at CES challenging our idea of mobility?
When Jen-Hsun Huang and Sajjad Khan took centre stage, all eyes focused on them. Jen-Hsun is CEO and founder of NVIDIA Corp [NASDAQ:NVDA]. Sajjad is vice president of Mercedes-Benz Digital Vehicle and Mobility.
The two men represented two different companies, but they both had one goal in mind: To bring artificial intelligence (AI) powered cars to market.
Collaboration between the two companies began three years ago. ‘When our teams came together there was instant chemistry,’ Jen-Hsun said. ‘[W]e share a common vision about how AI can change your driving experience, and make it more enjoyable.’
Both companies will focus on furthering deep learning and AI. ‘It has completely revolutionised computing from the way you speak to your phone now to the way you take photos and upload to the cloud and how it automatically tags and hosts it for you,’ Jen-Hsun said.
And it will do the same thing for mobility. NVIDIA and Mercedes have co-located teams and offices in Sunnyvale, California. ‘[W]ithin 12 months,’ Sajjad said, ‘…we are rolling out a product with NVIDIA.’
Another company changing what mobility means was Mobileye NV [NYSE:MBLY]. They are a chip sensor company at the foundation of how driverless vehicles ‘see’. They’ve partnered with Bayerische Motoren Werke AG [ETR:BMW] and Intel Corp [NASDAQ:INTC], announced in July last year.
And they’re now testing 40 autonomous BMWs on roads this year. In front of press at CES, co-founder of Mobileye, Professor Amnon Shashua, said:
‘Over the last six months, we have made very good progress in designing a state-of-the-art solution for autonomous driving on both highways and in urban areas. The solution has been defined in a scalable manner to allow affiliate automakers to meet their unique needs.’
Decide now before it’s too late
I believe 2017 will be the year of self-driving vehicles, not because they’ll be on the roads this year, but because their investment timeline is running out.
Let me give you a quick example of what I mean.
Would you have liked to invest in Apple Inc. [NASDAQ:APPL] when it was just starting out, or today? The answer is a no-brainer. You’d want to invest in Apple when they were just starting out. If you didn’t, you’d miss all the growth they had throughout the years.
Well, it’s the same principle for driverless cars. Right now the technology and industry is still working on ironing things out. That means there’s huge growth potential to capture. But time is running out. Driverless cars won’t be something ‘coming soon’. In the future, it will be mainstream. And that’s when it becomes harder to make explosive returns from the industry.
I’m not saying you should put all your money into companies working on driverless vehicles. What I’m saying is that it’s an industry and technology which could be huge in the future. And it’s still in its early stages.
Why not check out the industry and see if it’s an investment that fits your strategy?
Junior Analyst, Money Morning