3 actions that will shape the future of technology

Technology is constantly evolving, and the performance of the stock market over the past decade has shown that technology stocks are a must-have for almost any style of investing.

The so-called FAAMNG stocks were big winners and are now the five most valued companies in the United States. The tech sector’s share of the global stock market, meanwhile, will only grow in the years to come, as technology penetrates deeper into business and everyday life.

With that in mind, we asked three of our contributors to choose actions that determine the evolution of technology. Read on to see why Shopify (NYSE: SHOP), You’re here (NASDAQ: TSLA), and Facebook (NASDAQ: FB) all made the list.

Image source: Getty Images.

Shop till you drop

Eric Volkman (Shopify): The coronavirus pandemic has forced many consumers to replace in-person shopping with online variety. Ease and convenience become a habit that’s hard to break. This, combined with other positive trends, is why e-commerce faces a long-tail growth story where it will get much, much bigger.

As it is, one of the obvious beneficiaries will be Shopify, the leading online retail platform operator. The company is the one-stop-shop (sorry) for a lot of businesses growing an online presence, and it earns revenue by charging a flat subscription fee or (in the case of its Shopify Plus service aimed at large businesses ) a percentage of the customer’s sales.

It’s a clean, simple, and efficient way to get some of the e-commerce windfall. As a result, Shopify – hardly a young company – continues to grow like gangbusters.

In fact, Shopify’s 86% year-over-year revenue growth in 2020 to $ 2.9 billion was its fastest growing revenue in the past four years. Many new, hot tech companies can generate double-digit growth in their early years, but it usually slows down before long. It is a rare and special operator who can in fact to augment this rate, and do so after he’s been at the scene for a while.

When it comes to profitability, Shopify has simulated other rising technologies by going in the red for years. After all, the costs of developing its offerings were considerable. That changed in the fourth quarter of 2019, when he made a net profit of around $ 800,000. Since then, those numbers have improved dramatically – in its last two quarters, it grossed $ 879 million and nearly $ 1.26 billion, respectively.

Skeptics are quick to point out that Shopify stock has a sky-high valuation, in large part thanks to its monster popularity with investors during the pandemic. Its 12-month price-to-sell ratio has grown to almost 51, and its futures price-to-earnings ratio is 244. In comparison, another e-commerce favorite Amazon has a P / S of 3.9 and a P / E of 58.

Yet Amazon, while unquestionably a retail juggernaut, is a more mature company than Shopify. And this latest venture is still in the midst of a gold rush that will only get more crowded. In many ways, Shopify won’t just be a beneficiary of the future of ecommerce – it is the future of electronic commerce.

Writing the future of the automobile

Trevor Jennevine (Tesla): Tesla might not be the first company that comes to mind when you think of tech stocks, but it just might be. Recently, CEO Elon Musk expressed his belief that in the long run people would view Tesla as an artificial intelligence and robotics company, not just an electric vehicle (EV) maker.

At this point, as of October 2016, all Tesla vehicles come with autopilot hardware, including eight external cameras, 12 ultrasonic sensors, and an on-board supercomputer. Today, with over a million cars on the road, the company has collected over 3 billion kilometers of actual driving data, far more than any other automaker. This gives Tesla a significant advantage in the race to build a fully autonomous EV.

In 2019, the company reinforced this advantage with the launch of Autopilot Hardware 3.0, including an upgraded version of the on-board supercomputer. At the time, Musk called him “[objectively] the best chip in the world, ”and a Nikkei report came to the same conclusion, stating that Tesla’s technology was six years ahead of its rivals.

Most recently, Musk made a bold announcement at Tesla’s Battery Day event, claiming the company would produce a $ 25,000 fully autonomous electric vehicle over the next three years. You read that right – Tesla plans to have a self-driving and affordable electric car in the short term.

If the company achieves this goal, it could drastically change Tesla’s business model. Rather than compete on low-margin vehicle sales, Tesla could license its autonomous driving platform to other automakers, transitioning to the higher-margin software industry. The company could also launch an autonomous transportation network, a market that Cathie Wood’s Ark Invest estimates at $ 1.2 trillion by 2030. And given Tesla’s advantage – better technology and more data – the company could capture a good chunk of that figure. .

As a final thought, Tesla stock is currently trading at an outrageous price of 19 times sales, while Toyota shops even with sales. But a decade from now, if Tesla shifts gears and disrupts the mobility industry, that number may not seem so absurd in hindsight. This is why it seems now is a good time to buy a few shares of this tech stock.

Meet me in the metaverse

Jeremy Bowman (Facebook): Traditionally, Facebook has not been known as a pioneer of new technologies. The company dominates social media and derives its income from advertising, and although social media as a concept is new, made possible by the internet, selling advertising alongside content is an age-old business model.

However, Facebook’s next phase could be very different. The company is investing heavily in its virtual reality platform, Oculus, and similar projects at Facebook Reality Labs, its research division dedicated to augmented and virtual reality. In Facebook’s second quarter earnings report, CEO Mark Zuckerberg introduced investors to the term “metaverse,” which he explained during the earnings call was a virtual environment where people can be present. with each other in digital spaces. Zuckerberg described it as a place where anyone can hang out with friends, work, create, or play games.

So far, Oculus only generates a small fraction of Facebook’s total revenue, but it could become much larger as virtual and augmented reality (AR and VR) becomes mainstream. Zuckerberg predicted that virtual reality would be the next big computing platform, noting that historically computing platforms have changed about every 15 years, from mainframes to PCs, to the internet, to mobile. Since the iPhone was first introduced in 2007, the transition to virtual reality is expected to take place in the next few years, based on this model.

Monetization of the Metaverse will come later, but it’s easy to see how a new VR and AR experience lends itself to a wide range of possibilities, including advertising, subscription content, a Apple-like the app store, games and others. Zuckerberg is only 37 years old and could very well lead Facebook in 2050, which will give him plenty of time to realize his vision. Wherever the future of technology goes, it’s a safe bet it will be there.