With the explosion of generative artificial intelligence (AI) and life-changing medical advances over the last 12 months, the world is on the precipice of a technological revolution. While tech companies, particularly the Magnificent Seven, are the major beneficiaries of these new trends so far, tomorrow’s winners will be companies that differentiate themselves, create value, solve problems, and drive innovation across industries.
The significant appreciation in the markets linked to these tech giants is intriguing; however, the more interesting—and more beneficial—story is the innovation and technology gains those companies will create in the future. At Principal Asset Management, we identified three industries we think will drive future growth and represent vital areas of opportunity for investors: agriculture, infrastructure, and health care.
We are excited about the possibilities technological advances bring to developing countries.
Agriculture
Agriculture is one of the least digitalized industries, with many farming practices astonishingly similar to those of a century ago. However, this began to change rapidly over the past decade through the application of leading-edge technologies enabling data-driven decisions and vastly improved efficiencies.
For example, precision agriculture combines machinery and vision technology, providing for more efficient application of fertilizers and herbicides. Leading-edge sprayers can distinguish between a viable corn plant and a weed in the blink of an eye, applying a precision application to only the weed. This results in a massive reduction in herbicide usage and input costs while maintaining 100 percent weed control, a positive for profitability, yields, and the environment.
AI and new technology offer agricultural companies advanced abilities to monitor crops, quickly identify potential issues, and coordinate with global supply databases, moving the world toward a future with less food waste and hunger. From an investment perspective, the companies delivering leading-edge agriculture solutions will be in an attractive position over the coming decades.
Infrastructure
Technology is mission-critical for air navigation service providers in delivering safe and efficient management of aircraft through the airspace. Recently, air navigation service providers evolved the use of technology from execution to innovation, driving efficiency and leading the industry’s path to decarbonization:
-
Technology as a strategic differentiator—Enabled by air navigation technology investments, free routing is a critical innovation enabling airlines to fly the shortest and most direct routes. This helps airlines save time, fuel, and air navigation costs while reducing their environmental footprint.
-
Driving individual and industry upside—Between 2017 and 2022, free routing resulted in a reduction of fuel consumption of 268 million kgs, avoiding the emittance of 845 million kgs of carbon dioxide. This positive outcome also translates into value for shareholders. Early investors captured greater market share in the handling of overflight volumes, ultimately supporting long-term financial returns.
Investors in sustainable listed infrastructure companies are uniquely positioned to encourage proactivity and early investment to drive market share, support financial returns, and contribute to emissions reductions across the broader aviation ecosystem.
Health Care
If it feels like Ozempic is already a household name, it’s because GLP-1s quickly demonstrated the ability to improve underlying metabolic health and associated comorbidities by addressing the global type 2 diabetes and obesity epidemic. In fact, the GLP-1 class has the potential to significantly reduce the public health and economic burden associated with obesity, type 2 diabetes, and other health issues.
Outside of GLP-1s, pharmaceutical companies continue to innovate with potential next-generation therapies, raising the bar and benefiting patients. Antibody-drug conjugates, or smart chemotherapy, hold the promise of replacing chemotherapy across solid and hematological malignancies with a more potent and tolerable therapy.
Given the expansive list of health issues GLP-1s stand to remedy and advancements in other medical fields, the prospect of pioneering new life-altering medical products and services presents a distinct opportunity to invest in global well-being.
Endless Opportunities for a More Equitable Future
To some, it might feel overwhelming to be on the precipice of a potential technological revolution. However, with radical change comes opportunity. As champions of an equitable and inclusive future, we are excited about the possibilities these technological advances bring to developing countries, particularly those identified in Principal’s Global Financial Inclusion Index. Looking ahead, the long runway of emerging technologies will provide opportunities for innovative companies and differentiated investors to radically change our shared future for the better.