Automobile Innovation: Autonomous Driving and Tax Credits

NIO recently announced that it will be working with Tencent, a gaming, social media, and cloud computing giant in China, on autonomous driving and high-definition mapping. This move comes as XPeng and Chinese e-commerce giant Alibaba opened a computing center for training software for driverless cars.¹

General Motors Co., on the other hand, says their electric-vehicle program will be profitable by 2025 and forecasts that the annual revenue growth over the next three years will be around 12%, with electric vehicle sales being the primary driver of the growth.

Furthermore, the company expects its electric vehicles to be eligible for consumer tax credits of up to $3,750 per vehicle next year, and the company will start sourcing production of battery materials to qualify for the full $7,500 tax credits.²

Cybersecurity: Cloud and Data Center Vulnerabilities

In the first half of 2022, there were 2.8 billion malware attacks globally and 236.1 million ransomware attacks. By the end of the year, it is anticipated that six billion phishing attacks will have been launched.

As cyberattacks have become rampant, the Institute of Electrical and Electronics Engineers (IEEE) recently conducted a survey of 350 chief technology officers, chief information officers, and IT directors about the most important technologies in 2023. The survey revealed that 51% of executives see cloud vulnerabilities as one of their top concerns. 43% of executives mentioned data center vulnerability as their top concern.

Other areas of concern for cybersecurity executives and professionals included ransomware attacks, coordinated attacks on an organization’s network, and the lack of investment in security solutions.³

Cloud Computing: AWS Chip and Pledge

Amazon.com Inc.’s cloud-computing unit, Amazon Web Services (AWS), is introducing a new version of its Graviton chips, designed to power high-end computing and help in tasks such as weather forecasting and gene sequencing.

This opens doors for AWS to rent computing power to its customers which is more cost-effective than renting time on processors built by companies such as Intel Corp., Nvidia Corp., and Advanced Micro Devices Inc. Furthermore, by introducing the new chip, Amazon can compete directly with the above-mentioned companies, which are the largest suppliers of chips.⁴

In addition, Amazon’s AWS recently announced an “AWS Digital Sovereignty Pledge”.

With this pledge, the cloud computing giant made a promise that customers will have full control over the location of their data within AWS, have control over how it’s accessed, and have the ability to encrypt it everywhere.

As part of the pledge, AWS has also vowed to make its cloud stronger against any network disruption and natural disasters.⁵

E-Gaming: Video Games and the Box Office

The gaming industry is growing at a robust pace. In fact, the pandemic has really accelerated growth in the video games industry, and the ripple effects are still being felt. In 2022, the video games industry is expected to be worth $170.0 billion—that’s five times as much as the global box office.⁶

Electronic Arts Inc. said recently that it has ironed out a deal to develop three games inspired by characters in the Marvel Cinematic Universe (MCU). This deal gives Electronics Arts access to one of the biggest and most well-known entertainment franchises in the world.⁷

 

5G: T-Mobile and Citigroup

T-Mobile US Inc., held by the fund and one of the largest 5G wireless carriers in the U.S., is working with Citigroup Inc. to create a fiber-optic network through a joint venture or a commercial partnership that could be worth as much as $4.0 billion.

The company is aiming to target the home-broadband market through fibre-optic networks that generally require immense investment. Although no deal has been inked yet, it would be a big step for the company. T-Mobile doesn’t currently own any fibre networks like its peers and leases the capacity for its mobile-phone network.

T-Mobile could also get help from a $100-billion fund created by the U.S. government to improve broadband.⁸

Robotics & Automation: Intel’s Restructuring and Competitiveness

Intel Corp, held by the fund and the world’s largest semiconductor chip manufacturer, recently revealed that it will be splitting its graphic chips unit into two. This decision will involve combining the consumer graphics unit with Intel’s client computing group (a unit that makes chips for personal computers) and merging the accelerated computing teams with its data center and artificial intelligence (AI) unit.

Intel Corp believes that this division will better position the company to compete with Nvidia Corp and Advanced Micro Devices as it doubles down on accelerated computing. Currently, this growing segment is dominated by Nvidia.⁹

Fintech: J.P. Morgan Payments and Mastercard

J.P. Morgan Payments and Mastercard have launched Pay-by-Bank in the U.S. and are expecting it to expand in 2023.

At its core, Pay-by-Bank is an Automated Clearing House (ACH) payment that allows consumers to share their financial data with trusted parties to pay bills directly from their bank account with superior security. With this, consumers won’t have to worry about knowing factors like routing and account numbers each time they attempt to pay bills. Furthermore, for billers and merchants, it makes the process of onboarding customers easy, and helps them reduce their costs and risks when it comes to bank account information.

Pay-by-Bank could be beneficial for those who engage in making/receiving recurring payments such as utilities, tuition, insurance, healthcare, rent, and others.

Billers and merchants that have customers paying with ACH can integrate the J.P. Morgan Payments Pay-by-Bank solution on their existing payments page. When checking out, consumers select the “Pay-by-Bank” option, and after verifying themselves, they could complete the payment.¹⁰

Genomics: Extending Lifespans and Innovative Medications

Looking ahead to the next 100 years, research published in Nature Communications suggests that under the right circumstances, humans could live anywhere from 120 to 150 years of age in the near future.¹¹

A big part of increasing the average life expectancy at birth is having access to innovative medications and healthcare. Pharmaceutical companies that are working on aging research, drug discovery, and biomarker development include Novartis, Life Biosciences, and startups such as BioAge Labs and Cambrian Biopharma.

Bristol Myers Squibb, a multinational pharmaceutical company held by the fund, recently announced the results of new research from its multiple myeloma portfolio. The company’s ongoing research and promising results demonstrate the advancements they have made in combatting the disease and further show the company’s commitment to providing patients with the ability to receive tailored treatment options that generate the best possible outcomes.

Currently, multiple myeloma is an extremely challenging disease to manage and it affects patients of varying demographics and lifestyles. While scientific advances have helped to improve patient survival rates, the disease nonetheless greatly impacts one’s quality of life.¹²

Investing in Disruptive Innovation with EDGE ETF

The award-winning Evolve Innovation Index Fund provides access to global companies involved in disruptive innovation across a broad range of industries, including cybersecurity, cloud computing, eGaming and eSports, automobile innovation, 5G, FinTech, genomics, and robotics and automation

Portfolio Strategy and Activity

For the month, GDS Holdings Ltd. made the largest contribution to the Fund, followed by Arqit Quantum Inc. and Polestar Automotive. The largest detractors to performance for the month were Sentinelone Inc., followed by Edgio Inc. and Telos Corporation. On the last rebalance, FANUC Corp., Argenx SE, Waters Corp, and Block Inc. were added to the fund.

 

For the latest information on investing in innovation and industry updates on related investment products, sign up for our weekly newsletter here

 

 

Sources:

1. Kharpal, A., “Chinese Tesla rival Nio and giant Tencent partner to work on self-driving tech,” CNBC, November 29, 2022; https://www.cnbc.com/2022/11/29/china-tesla-rival-nio-and-tencent-partner-to-work-on-self-driving-tech.html.
2. Welch, D., “GM sees sales rising 12% yearly through 2025, mostly from EVs,” BNN Bloomberg, November 17, 2022; https://www.bnnbloomberg.ca/gm-sees-sales-rising-12-yearly-through-2025-mostly-from-evs-1.1848076.
3. Shacklett, M., “Top cybersecurity threats for 2023,” TechRepublic, November 28, 2022; https://www.techrepublic.com/article/top-cybersecurity-threats/.
4. King, I. and Day, M., “Amazon’s New Chip Moves AWS Into High-Performance Computing,” BNN Bloomberg, November 28, 2022; https://www.bnnbloomberg.ca/amazon-s-new-chip-moves-aws-into-high-performance-computing-1.1852171.
5. Lardinois, F., “AWS announces Digital Sovereignty Pledge,” TechCrunch, November 28, 2022; https://techcrunch.com/2022/11/28/aws-announces-digital-sovereignty-pledge/?guccounter=1.
6. “Microsoft, Activision Blizzard and the future of gaming,” The Economist, November 29, 2022; https://www.economist.com/business/2022/11/29/microsoft-activision-blizzard-and-the-future-of-gaming.
7. Shaw, L., “Electronic Arts Strikes Three-Game Deal With Marvel,” BNN Bloomberg, October 31, 2022; https://www.bnnbloomberg.ca/electronic-arts-strikes-three-game-deal-with-marvel-1.1839605.
8. Tan, G., Baker, L., and Moritz, S., “T-Mobile Seeks Fiber-Optic Venture Aimed at Home Internet,” BNN Bloomberg, November 7, 2022; https://www.bnnbloomberg.ca/t-mobile-seeks-fiber-optic-venture-aimed-at-home-internet-1.1842871.
9. “Intel splits graphic chips unit into two,” Yahoo Finance, December 21, 2022; https://finance.yahoo.com/news/intel-splits-graphic-chips-unit-200222969.html.
10. “J.P. Morgan and Mastercard modernize account-based payments with innovative ‘pay-by-bank’ solution,” Mastercard, November 9, 2022; https://www.mastercard.com/news/press/2022/november/j-p-morgan-and-mastercard-modernize-account-based-payments-with-innovative-pay-by-bank-solution/.
11. “Longitudinal analysis of blood markers reveals progressive loss of resilience and predicts human lifespan limit,” Nature Communications, May 2021; https://www.nature.com/articles/s41467-021-23014-1.
12. “Bristol Myers Squibb Announces First Disclosures and New Data at ASH 2022, Demonstrating Commitment to Raising Standards in Treatment Through Broad Multiple Myeloma Portfolio,” Bristol Myers Squibb, December 12, 2022; https://news.bms.com/news/details/2022/Bristol-Myers-Squibb-Announces-First-Disclosures-and-New-Data-at-ASH-2022-Demonstrating-Commitment-to-Raising-Standards-in-Treatment-Through-Broad-Multiple-Myeloma-Portfolio/default.aspx.

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