Digital Transformation will fundamentally change how we live, work, and play. A critical mass of digital technologies – cheap connectivity, ubiquitous sensors, and massively scalable compute – provide fertile ground for innovation.
In rapid change, we see disruption for some companies, and for those that embrace digitization we see durable growth. These range the gamut from disruptive upstarts to established companies that renew themselves through Digital Transformation. Opportunities abound and we see particular potential in Health Care, Technology, FinTech, Industrials, Consumer Discretionary, and Communication services.
A case study – Dominant technologies diffuse faster than ever. It took 50 years for the telephone to achieve 50 million users. Facebook achieved 50 million users in just 3 years by capitalizing on wide adoption mobile broadband and smartphones.
Key Digital Transformation Themes
UBS has identified six major Digital Transformation investment themes
Data sources have proliferated given ubiquity of consumer connected devices and enterprise adoption of the Internet of Things (IoT). Every year sees new sources of information exchange and a heightened need for to process this information deluge.
Artificial intelligence, augmented reality, big data, cloud computing and 5G connectivity are set to transform many industries. Over the next decade, we see heightened spending on these key infrastructures.
Consumers have increasingly shifted consumption to online purchasing. Companies that prosper must embrace the right balance of online fulfillment and physical presence as competition has heightened from a new generation of Internet native companies.
Security and Safety
Consumers and businesses face a wide array of security threats to their digital assets. A new generation of security companies have risen to help secure these assets from threats ranging from lone bad actors to state sponsored actions.
Health and Safety
Healthcare has been traditionally slow to adopt new digital technologies. We see faster adoption as healthcare systems around the world struggle with rising healthcare costs. Telemedicine and genomic medicine offer new modalities that could meaningfully affect patient outcomes.
Urbanization, strong millennial demand, and favorable regulations suggest that innovation in payments and other financial technologies point to strong secular growth for FinTech.
In all this areas are companies that thanks to their ability to innovate have the potential of fast and strong growth an may be attractive for investors.