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January
12
2019

This Technology Will Be Bigger Than the Internet
Jeff Brown

Editor’s Note: Regular Diary readers know Jeff Brown as Bill’s go-to technology expert. With decades of experience working and living in the heart of Silicon Valley, Jeff has the inside track on the biggest tech trends before they hit the front pages. He’s also the man who pinpointed the best-performing stocks of 2016 and 2018. So when Jeff unearths a big story, we share it with Diary readers.

Today, our guest editor shows why self-driving cars are no longer just the realm of science fiction, and reveals the piece of technology that will rewrite our world the way the internet did decades ago. Read on…

Last October, a modified Toyota Prius drove itself 3,099 miles – from the Golden Gate Bridge in San Francisco to the George Washington Bridge in Manhattan.

There was a human in the driver’s seat, but he didn’t touch the steering wheel, gas, or brake pedals for the entire trip. The self-driving car drove itself the entire distance.

If any readers are curious about the trip, have a look at the time-lapse video of the entire coast-to-coast journey here.

This coast-to-coast, self-driving journey was the first of its kind. Yet it got little to no press.

But make no mistake, this is a remarkable achievement. This sort of trip wouldn’t have been possible even just a few years ago.

Today, I want to share with you the technology that made it possible, and show why it’s a trend that ought to be on every investor’s radar…

The Black Box

I remember when I first sat in a self-driving car. It was October 2011, on NASA’s Ames Research campus in Mountain View, California. The car was one of Google’s earliest versions of its self-driving technology.

It wasn’t pretty. The outside of the car was laden with large sensors, and the inside of the car was packed front to back with computing equipment. There was barely enough room for someone to sit in the driver’s seat.

But only seven years later, the technology has progressed immensely.

The Prius I mentioned above that drove over 3,000 miles without human intervention was outfitted with only seven cameras. Six were positioned outside the car in order to provide a 360-degree view, and one was inside facing the driver.

Equally impressive was that the trip was made with only basic digital maps to work from. This is compared to the high-definition maps often used in self-driving vehicles, which are precise down to a few centimeters.

What was the technology that enabled the self-driving Prius to make its cross-country trip? After all, it looked just like any other car.

The answer is simple… Hidden in plain sight in the back of the car was a black box. It looked something like this.

The Secret Hiding in the Trunk

This black box is the key. The black box makes use of a special type of software that is an essential part of self-driving cars. I’m talking about artificial intelligence, or AI.

Contained within that black box was an advanced system powerful enough to take in the data from the Prius’ cameras, use AI to analyze the data, and drive the car and the passenger coast-to-coast safely.

At this point, you may be wondering what AI has to do with self-driving cars.

You see, the way autonomous cars will become dependable enough to function on public roads is through the use of AI.

As these cars drive, they produce a massive amount of data. Just one autonomous vehicle is estimated to produce roughly 4,000 gigabytes of information a day. For perspective, the average high-definition (HD) movie has only 4 gigabytes of data.

This data is then analyzed with AI and used to improve the car’s driving performance.

That’s what allowed the Prius to drive cross-country. The car “learned” how to drive safely by analyzing millions of miles of data. That’s why I say AI is the key to the success of self-driving cars. They simply can’t operate without it.

Artificial intelligence is what will ultimately bring self-driving cars to the masses.

And it’s not just self-driving cars. AI is becoming increasingly essential to our modern lives. In fact, you’ve likely used AI without even knowing it.

Everyday AI

Have you ever purchased something by communicating with an Amazon Echo (Alexa)?

Have you ever asked Apple’s Siri to look up a fact from the internet?

Or maybe you’ve simply searched for something on Google.

If you’ve done any of these things, you’ve already used AI. All of these devices and services make use of artificial intelligence.

And AI is becoming a necessity in modern business. Companies like Bloomberg, Walmart, and even Johnson & Johnson are using AI on a daily basis.

According to a November 2018 survey from McKinsey & Company, 47% of surveyed businesses said they had begun implementing artificial intelligence into their business. In 2017, that figure was only 20%.

And according to a recent study by MIT’s Sloan Management Review, 85% of companies think AI will offer a competitive advantage.

There will come a time soon that AI won’t just be advantageous to companies, it’ll be a necessity. In the next few years, a company that fails to adapt artificial intelligence into their business model would be akin to a company that doesn’t use the internet today. It will become obsolete.

You get an idea of just how essential AI is becoming to corporations by looking at the amount of money companies are willing to pay to acquire AI startups.

The increase in investment in the AI and machine learning (ML) industry over the last few years has been staggering. Just have a look at the AI/ML acquisition value since 2015.

In 2015, there was only $2.6 billion worth of acquisitions in AI/ML-focused tech companies. By 2017, that number had increased by 7x to an incredible $18.4 billion.

Admittedly, 2017 was a bit of an outlier year due to Intel’s $15.3 billion acquisition of Mobileye.

Mobileye was a major player in autonomous driving technology. It used machine learning for advanced driver assistance systems (ADAS), a precursor to self-driving cars.

More telling to me, however, is what happened next.

2018 saw $14.7 billion in acquisitions without any outliers like Mobileye. It represented 84% growth compared to 2016.

However, when I look at these numbers, the actual number of acquisitions is an even stronger indicator than their dollar value…

In 2018, we saw 241 individual acquisitions of AI/ML companies. That’s a 38% increase compared to 2017 and an increase of nearly 5x since 2015.

I say that this is a stronger indication of activity because this is a relatively new industry. There just aren’t that many large, $15 billion AI companies around to acquire. Most of the activity is in smaller, early-stage companies that haven’t reached anywhere near $1 billion-plus valuations.

That means that incumbent technology companies that want access to artificial intelligence technology and teams of engineers must go out and acquire these smaller companies.

All told, the revenue from the AI market was estimated to be $7.4 billion in 2018. But that figure is expected to grow to $89.8 billion by 2025. That’s a compound annual growth rate of 42%.

We have reached an inflection point with this technology. We are on the cusp of explosive growth. Few realize it, but in a matter of a few years, artificial intelligence will be as commonplace as the internet. We’ll look back and wonder how we got along without it.

AI won’t just improve upon today’s technology. It will reinvent it.

Regards,

Jeff Brown
Editor, The Near Future Report 

P.S. There’s one more part of this story I wasn’t able to include above. Artificial intelligence will change our society just like the internet did two decades ago. Smart investors will make a fortune. But before AI and self-driving cars go mainstream, one more piece of tech needs to be completed. It’s not an exaggeration to say that the future of America’s economic dominance depends on this. Get the full story, and learn why this tech will be the biggest investment story of 2019, by watching this special presentation I just released.

Jeff Brown is a high-technology executive with 25 years of experience.

And that’s helped make him successful at identifying tech companies that are well-positioned for exponential growth.

As an active angel investor in early-stage technology companies, he has access to information the public never sees. He is on the front line, in the field, seeing things months, if not years, before the mass market becomes aware.

Jeff has a wide range of technology industry experience. From semiconductors to mobility, to broadcasting and video technology, to technology infrastructure, to IT networking, to IT security, to automotive and even consumer electronics… He’s done it all.

He built early-stage startups and ran organizations generating hundreds of millions of dollars in annual revenues. And now he shares that knowledge and experience with readers of his Exponential Tech Investor investment advisory.

Though he was born, educated, and started his career in America, he spent the last two decades living and working in international markets. That gives him a unique global perspective on business and investing and in analysis.

His two investment services are The Near Future Report and Exponential Tech Investor.

The Near Future Report focuses on identifying, and profiting from, world-changing trends on the verge of mass adoption.

The mission of Exponential Tech Investor is to identify small- or even micro-capitalization technology stocks that have the potential to become the next Apple, Facebook, or Microsoft.

Jeff earned his Bachelor of Science in aeronautical and astronautical engineering from Purdue University – one of the top schools in its field. He also earned his Master of Science in management, major in corporate finance, at the London Business School.

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