Where to look for the ten-trillion-dollar titan

Thought of the day

by Chief Investment Office 06 Aug 2018

Apple made financial history last week, becoming the first USD 1 trillion company. It comes 31 years after IBM became the world's first USD 100bn company, which itself came 32 years after GM reached a USD 10bn valuation.

At this rate, we might expect the first USD 10 trillion firm to materialize sometime around 2050. We look to three emerging industries with the greatest potential to produce the first ten-trillioner:

  • Firms in enabling technologies, such as artificial intelligence, could scale up rapidly. A global leader in general artificial intelligence, or symbolic and machine learning, could claim large market shares across a wide range of industries. Enabling technologies more broadly are on track to be a USD 1.1 trillion-a-year industry by 2025, and could continue to grow at a double-digit rate in the decades that follow. 
  • Any fintech firm able to claim a large share of the global financial services sector could be a contender to surpass Apple's valuation. The consumer and commercial payment flow is already USD 225 trillion, with further big opportunities in wealth management, insurance, and online lending. Fintech penetration is still low, at close to 2.5% versus 10% for e-commerce overall, so the growth potential is large. 
  • Firm with access to large volumes of data could also produce a contender by exploiting information to target products and services more effectively. We expect global internet penetration to increase from 55% in 2017 to around 75% by 2027, alongside a ten-fold increase in digital data over the coming decade. Asset light platform firms, which generate data, can also scale up quickly.

Amid worries about deteriorating trade tensions, longer-term thematic investing can offer a respite from cyclical concerns. We believe in a diversified investing approach rather than seeking to pick single-company stars. But by looking to such multi-decade trends with a diversified approach, investors increase their chance of participating in the success of the first USD 10 trillion titan.

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