Submitted by Nick Colas of DataTrek Research
Thanks to all of you who participated in last week’s DataTrek Tech Disruption survey. We know the questions covered a lot of ground, so we appreciate your powering through and giving us so much useful information. Today we’d like to share the results. First, a few details:
- We got 147 responses, the vast majority from DataTrek’s proprietary contact lists of investment professionals.
- The modal age range of respondents was 46-55 (27% of all survey takers). A further 23% were ages 56-65, and 20% were 36-45 years of age.
- The survey was open from May 13th to May 19th.
Here are the questions in the same order they appeared, your collective answers (edited/bolded for brevity/readability), and our comments:
#1. How reliant are you on your personal smartphone for functions other than basic text and voice communication?
- Not at all: 5%
- Somewhat: 17%
- Quite: 19%
- Very: 32%
- Extremely: 27%
#2. Do you believe you will be as reliant on your phone in 5-10 years, or will other technologies replace some of its functions?
- I expect smartphones will remain very central to my daily life: 59%
- I believe other technologies/products will eventually make smartphones less central to my daily life: 41%
Our take on these 2 questions: we were not surprised that more than three quarters (77%) of respondents feel at least “Quite” tied to their phones for daily non-communication applications.
The fact that a majority think it will remain thus for 5-10 years was surprising, however. Voice applications like Amazon Echo and Google Home are really Trojan horses meant to replace smartphones, tablets and PCs, after all. The Internet-of-Things should also serve to automate tasks where a smartphone is currently the prevailing option, such as shopping or home automation.
This confidence is good for investor sentiment on Apple, reliant as it is on global smartphone sales. Warren Buffett, despite reportedly not touching his own iPhone, must see things the same way as our panel and view the company’s market position as its largest “Moat”.
#3. What social media do you use on a daily basis? (Check all that apply)
- LinkedIn: 40%
- Twitter: 36%
- Facebook: 35%
- YouTube: 28%
- Instagram: 26%
- Snapchat: 7%
- I do not use social media on a daily basis: 22%
Our take: we were curious as to what social media the investor class uses most. Now we know, and so do you.
#4. Do you own a home automation speaker, and if so which one?
- Amazon Echo: 31%
- Google Home: 5%
- Apple HomePod: 0%
- No, but I am considering a purchase in 2018: 14%
- No, and I am not considering a purchase: 48%
Our take: Amazon’s lead in home automation is impressive, and these results mirror other surveys we have seen. As for the almost 50% of you that have no interest in this technology, we hear you. (At least until there is a “Killer app” that makes this a must-have home device for a broader audience than early adopters…)
#5. Have you ever tried a set of virtual reality goggles, or do you own a pair currently?
- No, I have never tried them: 68%
- Yes, but I would not consider buying: 19%
- Yes, and I would consider buying them: 6%
- I own a pair: 7%
Our take: speaking of a lack of “Killer apps”, VR doesn’t seem to have one for most of our respondents.
#6. How long do you think it will be before fully autonomous (no steering wheel) personal vehicles go on sale in the US/Europe/China?
- Within the next 5 years: 18%
- 5 – 10 years: 50%
- 10 – 15 years: 18%
- +15 years from now: 14%
Our take: we were surprised by the confidence expressed here in the 1 to 10-year window, with 68% of respondents in this camp.
Given the auto industry’s long product lead times for even non–autonomous cars/trucks (up to 4 years), this implies that vehicles without steering wheels will start their way through the development process in the next 36-48 months. There is still considerable work to be done in this area, primarily in collecting data from real-world trials to improve existing algorithms.
Both auto and tech industries are working flat out to get products to market, and our survey shows investors clearly expect to see the results of these efforts sooner than traditional product development cycles would seem to allow.
#7. If shown to be safe, reliable and affordable, would you buy or lease an autonomous vehicle for your personal use?
Our take: There is real demand for fully self-driving vehicles – more than we would have anticipated. Our respondents, mostly between 36 – 65 years of age and affluent, are certainly the core target market for this new technology. Whenever these products are ready, there is a market ready and waiting.
#8. How much risk do you think artificial intelligence/other technology pose to your professional relevance or career goals?
- None: 20%
- Some: 64%
- A lot: 16%
Our take: This is an easy big-picture question to ponder about other professions, but a harder one to answer when it comes to one’s own career risk. Our respondents have their eyes wide open on this point, which is obviously a healthy attitude to take.
#9: What single website or app do you feel is most important to your workplace productivity? (147 answers, most commonly cited here:)
- Google (all properties): 28
- Bloomberg (website and terminal): 20
- Microsoft (mostly email): 10
- Single news sources (WSJ, FT, IBD, etc): 10
- Yahoo Finance: 4
Our take: like question #3, this is another chance to look over the shoulder of your fellow investment professionals. We were a little surprised there wasn’t more consensus on this point, but the varying responses highlight the fragmented nature of “Must have” technology and information sources in investing.
#10: Which large Tech company do you think is currently most at risk from incremental regulation?
- Facebook: 45%
- Amazon: 20%
- Google: 10%
- Twitter: 1%
- Microsoft/Apple: 0%
- I do not think regulation is a significant threat to any: 23%
Our take: despite this survey running several weeks after the Cambridge Analytica/Facebook scandal, respondents still put FB at greatest risk of regulation. Amazon’s #2 position here likely reflects recent criticism by President Trump.
Also worth noting: Microsoft and Apple apparently suffer no discount for potential regulation risk, and that more than 1 in 5 respondents think regulation is not a substantive issue for any of these names.
#11: Looking forward 10 years, which country/region do you think will lead the world in artificial intelligence technology?
- United States: 56%
- China: 43%
- Europe: 1%
- Other mentions: India, Korea, and a split decision with China leading China and the US the rest of the world
Our take: investors clearly see AI as a two-horse race. Europe is out of the picture, and Japan did not receive even one write-in vote.
We are torn as to what to make of this. The US has been the world leader in technology since just after the famous “Sputnik moment” of 1957. On one hand, the threat of Chinese competition in AI may push US companies to move faster, which is a positive for future growth. There is, however, the chance they lose the race.
So far neither camp has a convincing edge. With the billions of dollars flowing into development right now in both countries, however, it is logical to expect one will pull out ahead in the next 36-48 months. We, like our respondents, think the US has a modest edge. But not a lock…
#12: Do you believe any of the following are in a bubble? (Check all that apply.)
- Tech-focused venture capital: 41%
- US Tech stocks: 22%
- Chinese tech stocks: 16%
- None: 44%
Our take: Yes… Venture capital does feel frothy, but “None” was actually the most popular response here. Respondents generally feel comfortable with public Tech stock valuations, both here and in China, despite high valuations.
#13: Which basket of stocks/index do you expect to perform the best over the next 10 years? (Choose one.)
- MSCI World Index: 27%
- S&P 500: 27%
- Chinese BAT (Baidu, Alibaba, Tencent): 23%
- US FAANG (Facebook, Amazon, Apple, Netflix, Google): 17%
- US 2-Year Treasury: 6%
Our take: despite the answer to the last question, respondents indicated that they feel there is better value outside of super-cap Tech, both in the US and China. Also, they overwhelmingly expect both US and global equity returns will exceed inflation proxies like the 2-Year Treasury over the next decade.
Summing up with three brief points:
- Overall, the answers here certainly reflect a “glass half full” perspective on technology’s most important financial attribute: growth. Adoption rates on new offerings that are relevant to respondents’ lives, like Amazon’s Echo, are excellent and there is real interest in autonomous vehicles as well. The hype around this product is well deserved.
- Respondents expressed an asymmetric view on future technological disruption. They expect brand new technologies such as those that enable autonomous driving to be available in the next decade. At the same time, our survey takers expressed confidence that smartphones will remain central to their lives over the same 10-year horizon, even though there are products for sale right now that seek to undermine that dominance.
- While not worried about public equity valuations in Technology, respondents still favor more-diversified portfolios for the long term. This could well stem from knowing that the global market indices are already heavily weighted to Tech anyway.
Again, thanks to all who took the survey! We’ll be back with a new one in June