Disruptive innovation is reshaping industries at a pace that continues to accelerate, driving both opportunities and challenges across multiple sectors.

From electric vehicles to artificial intelligence, the rapid adoption of cutting-edge technologies is creating seismic shifts in market dynamics. Companies like Tesla, General Motors, and Adyen are leading the charge, with innovations that not only streamline operations but redefine entire business models. In cybersecurity, the growing reliance on digital infrastructure makes robust protection a critical necessity, while cloud computing and 5G advancements are enhancing connectivity and operational efficiency. As organizations integrate these technologies, the convergence of sectors such as robotics, genomics, and fintech underscores the transformative power of innovation.

This article explores how disruptive innovation is impacting a broad range of industries and shaping the future of global markets, while highlighting the investment potential in a world increasingly driven by technological breakthroughs.

Automobile Innovation

Tesla’s global vehicle sales rose 6.4% in Q3, marking the company’s first quarterly increase of 2024. From July to September, Tesla delivered 463,000 cars, up from 435,000 a year earlier, signalling that demand for electric vehicles may be rebounding as interest rates decline

Tesla’s sales rebound could be a harbinger of an overall uptick in sales of electric cars, given that it still commands nearly half of the U.S. electric vehicle market. General Motors reported a 60% surge in U.S. electric vehicle sales in Q3, delivering over 32,000 units, despite a 2% drop in total vehicle sales. GM’s top-selling electric vehicle, the Chevrolet Equinox SUV, moved over 9,700 units last quarter. A new entry-level Equinox, priced at $35,000 before tax credits, launched in September, undercutting Tesla’s Model Y, which starts around $45,000. Likewise, Ford’s U.S. electric vehicle sales rose 12% to 23,500, alongside a slight 0.7% gain in overall sales for the quarter.¹

Cybersecurity

While the primary cost of cyberattacks may be financial, companies and organizations overlook the less obvious damage to their reputation at their peril. Indeed, cyberattacks are taking a significant toll on corporate reputations, according to the Canadian Internet Registration Authority’s (CIRA) latest annual cybersecurity survey. The report revealed that 44% of organizations experienced a cyberattack in the past year, and 28% saw their reputations damaged—a sharp rise from 6% in 2018.

CIRA’s Jon Ferguson highlighted the growing risks throughout supply chains, stressing the need for stronger cybersecurity measures. Increasingly, organizations are turning to cybersecurity insurance, with 82% now covered, up from 59% in 2021.

Ransomware remains a critical threat, with 28% of professionals reporting successful attacks in the past year, 79% of which resulted in ransom payments. Most organizations paid between $25,000 and $100,000.² And more than a quarter (26%) of the cybersecurity professionals surveyed said that a cybersecurity breach in the previous 12 months had cost their business customers, as cybercrime drives clients away from affected businesses.³

Cloud Computing

In a sign of just how important the cloud has become to the functioning of modern life, the U.K. Government elevated data centres to critical national infrastructure status in September, placing them alongside sectors like healthcare, energy, and emergency services. This designation aims to bolster protection for these facilities against cyber-attacks, IT failures, and extreme weather, ensuring uninterrupted to vital services, such as AI, streaming, and data processing.

This marks the first update to the national infrastructure list in nine years, with data centres now officially one of 14 protected sectors. The decision followed a consultation initiated in late 2023. A dedicated monitoring team will assess threats and respond to potential risks, reflecting increased concerns over cybersecurity.⁴

E-Gaming

The global video game industry is on track to hit $250 billion by 2028, growing at a 6% annual rate, according to a Bain & Company report. In 2023, video game revenues reached $196 billion, surpassing both streaming services and box-office sales. The industry’s expansion has been fuelled by mobile gaming, cloud platforms, and virtual reality, appealing to a broad audience, with 52% of people across all ages playing regularly. However, video games remain especially popular among younger generations, with 80% of those under 18 identifying as gamers. Generative AI is poised to further transform gaming, offering players more tools to customize their experiences. Influencers who stream games are driving additional engagement. The study also highlighted the MENA region (Middle East and North Africa) as a rapidly growing market, with a 25% annual growth rate, outpacing China.⁵

Genomics

The power of generative AI is beginning to be felt in the pharmaceutical and biotech sectors as companies leverage algorithms to speed research and development of novel therapies. According to industry watchers, while AI investment in the global healthcare sector was around $15 billion in 2022, it is expected to be more than $187 billion by 2030.⁶ As the latest example of such collaborations, Generate, an AI-driven biotech, secured a major partnership in September with Novartis (held by the Fund), potentially worth up to $1 billion. The deal, which includes a $50 million upfront payment and a $15 million equity stake in Generate for Novartis, aims to leverage Generate’s AI platform to discover and develop DNA and protein-based therapeutics.⁷

Fintech

Financial technology platform Adyen (held by the Fund) has launched its Intelligent Payment Routing, its first-to-market cutting-edge AI-driven solution designed to optimize U.S. debit transactions. Intelligent Payment Routing offered an impressive 26% average cost savings and a 0.22% increase in authorization rates during a pilot with over 20 enterprise clients, including eBay and Microsoft. This innovation addresses the growing demand for fiscal efficiency, allowing businesses to enhance revenue without sacrificing acceptance or processing speed.

Key features of the Intelligent Payment Routing include the ability to dynamically route transactions to the most cost-effective networks. This capability is crucial, especially following U.S. regulatory changes that mandate debit cards be branded by at least two unaffiliated networks, fostering competition and reducing costs.

With debit transactions surging in popularity, accounting for nearly one-third of all payments, Adyen’s platform enables merchants to harness AI for real-time routing based on transaction fees and authorization rates. This has resulted in significant savings, with some merchants reporting up to 55% in cost reductions and up to $600,000 saved in just the first month.⁸

Robotics & Automation

Marvell Technology (held by the Fund), Lumentum Holdings, and Coherent Corp. have achieved a significant milestone in optical networking by demonstrating the industry’s first 800G ZR/ZR+ pluggable modules capable of interconnecting data centres over distances of up to 500 kilometres. This advancement extends the reach of traditional optical solutions, which typically support only 120 kilometres. This breakthrough supports the increasing demand from cloud operators scaling their infrastructure for AI services, which requires cost-effective and efficient interconnect solutions.

As the deployment of pluggable coherent modules continues to grow at a compound annual growth rate exceeding 100% since 2022, these modules are set to rival traditional embedded optics in performance. Industry experts indicate that this innovation paves the way for expanding the application of pluggables beyond short-reach interconnects, meeting the rising demand for bandwidth and long-distance connectivity in various network sectors. The collaboration between these companies marks a critical step towards optimizing data centre connectivity in the AI era.⁹

5G

NVIDIA has launched AI Aerial, a revolutionary platform designed to transform radio access network (RAN) technology into an AI-driven computing infrastructure, addressing the demands of next-generation generative AI across various sectors. This innovative suite combines accelerated computing software and hardware to optimize wireless networks, enabling telecommunications providers to move beyond traditional voice and data services.

AI Aerial is the first platform capable of simultaneously hosting generative AI and RAN traffic while integrating AI into network optimization. By leveraging AI-RAN, telecom operators can improve spectral efficiency, enhance service quality, and tap into new revenue streams, making it essential for the evolving landscape of 5G and future 6G networks. NVIDIA’s collaboration with industry leaders like T-Mobile, Ericsson, and Nokia aims to accelerate AI-RAN’s commercialization, unlocking opportunities for improved performance and reduced costs in the telecom industry.¹⁰

EDGE ETF: Investment in Innovation

The Evolve Innovation Index Fund (EDGE ETF) is an 8-in-1 innovation fund that invests in disruptive innovation themes across a broad range of industries, including: cloud computing, cybersecurity, egaming & esports, automobile innovation, 5G, fintech, genomics, and robotics & automation. For more information on EDGE ETF, visit our website at https://evolveetfs.com/edge/ or click here. Give your portfolio an EDGE

Portfolio Strategy and Activity

For the month, Evolve Automobile Innovation Index Fund made the largest contribution to the Fund, followed by Evolve Cloud Computing Index Fund and Evolve E-Gaming Index ETF. The largest detractors to performance for the month were Samsung Electronics Co Ltd, followed by Genmab A/S and KDDI Corporation.

Sources

1. Ewing, J. & Boudette, N.E., “Tesla Sales Increase, Suggesting Electric Car Demand Is Rebounding,” The New York Times, October 2, 2024; https://www.nytimes.com/2024/10/02/business/tesla-electric-vehicle-sales.html
2. Johnson, D., “Cyber attacks causing reputational damages: CIRA,” BNN Bloomberg, October 01, 2024; https://www.bnnbloomberg.ca/business/technology/2024/10/01/cyber-attacks-causing-reputational-damages-cira/
3. “New CIRA data finds cyber crime is driving customers away from impacted Canadian businesses,” Canadian Internet Registration Authority, October 01, 2024; https://www.globenewswire.com/news-release/2024/10/01/2956063/0/en/New-CIRA-data-finds-cyber-crime-is-driving-customers-away-from-impacted-Canadian-businesses.html
4. Zulhusni, M., “UK Government classifies data centres as critical as NHS and power grid,” Cloud Tech News, September 13, 2024; https://www.cloudcomputing-news.net/news/uk-government-ranks-data-centres-alongside-nhs-and-power-grid/
5. “Global video game industry on a healthy growth trajectory to $250 billion,” Consultancy-me.com, September 4, 2024; https://www.consultancy-me.com/news/9177/global-video-game-industry-on-a-healthy-growth-trajectory
6. “Can AI offer disruptive opportunities for pharma?,” Atradius, September 5, 2023; https://atradius.ca/reports/industry-trends-ai-injects-a-growth-opportunity-for-pharma-industry.html
7. Taylor, P., “AI firm Generate signs $1bn discovery deal with Novartis,” pharmaphorum, September 25, 2024; https://pharmaphorum.com/news/ai-firm-generate-signs-1bn-discovery-deal-novartis
8. “Adyen’s Intelligent Payment Routing Achieves 26% Cost Savings and Improves Payment Performance on US Debit Transactions,” Adyen NV, September 9, 2024; https://www.adyen.com/press-and-media/adyens-intelligent-payment-routing-usdebit
9. “Marvell, Lumentum and Coherent Demonstrate Industry’s First 800G ZR/ZR+ Pluggable Modules for 500km Data Center Interconnects,” Marvell Technology Inc, September 5, 2024; https://investor.marvell.com/2024-09-05-Marvell,-Lumentum-and-Coherent-Demonstrate-Industrys-First-800G-ZR-ZR-Pluggable-Modules-for-500km-Data-Center-Interconnects
10. Vasishta, R., “NVIDIA AI Aerial Launches to Optimize Wireless Networks, Deliver New Generative AI Experiences on One Platform,” NVIDIA, September 18, 2024; https://blogs.nvidia.com/blog/ai-aerial-wireless-networks/

Source: Getty Images Credit: Yuichiro Chino

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