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Major Themes Likely Impacting Industry Prospects

March 4, 2025

Overview

The pace of change over the next five to ten years is likely to be dramatic and widespread. In our view, institutional investors and risk managers would be well served by understanding and making adjustments for these changes. This has probably been one of the hardest installments to write, because the combination of emerging technologies typically creates entirely new services and industries. Initially, the internet was created as a means of sharing messages and information more efficiently, with few predicting the development of Google, Facebook, and X.

Major Themes

Advanced Fermentation (AF) – There was a time when natural dyes were produced from plant and animal extracts. For example, purple dye was extremely rare because it was harvested from scarce sea snails¹. Over time, readily available synthetic dyes replaced natural ones, thereby reducing costs and broadening the market.

Advanced Fermentation uses microbial hosts to produce specific products². Products include dairy, vitamins, antioxidants, rennet, and drugs. The relevance here is that AF has the potential (possibly likelihood) to replace dairy farming and other industries.

Artificial Intelligence (AI) – Appropriately, there has been considerable focus on this area, as it presents significant promise. We expect it will be paired with other technologies for maximum effectiveness.

Full Self-Driving (FSD) – The reality is that self-driving technology is already being tested in various cities, and over time, it is likely to become apparent to most that FSD is safer and more effective than traditional driving methods.

Self-driving trucks are currently being used in the oil patch³.

Improved Batteries (IB) – Effective storage of energy has limited the utility of intermittent energy sources. With increasingly powerful and less expensive batteries, the storage problem is rapidly being addressed.

Improved Robotics (IR) – It is only a matter of time (probably 2 to 5 years, depending on the application) before humanoid, general-purpose robots will be used in commercial applications. Apparently, Tesla is planning on utilize such robots in its assembly operations later this year⁴. The key factor that makes this development particularly powerful is the ability to upgrade software remotely, allowing all robots to share training data with models that are continuously improving. On the hardware side, significant advancements have already been made over the past few years and are likely to accelerate.

Improved Medicine – Google DeepMind’s Alphafold has identified over 200 million protein structures based on their amino acid sequence. Prior to this invention, researchers were required to go through a slow and costly process of determining protein structures by studying diffraction patterns after hitting distilled proteins with x-rays. Now, a key step the in development of drugs and drug delivery has been bypassed.

Natural Language Coding – Rather than rely on a specialized team to develop software, it is possible to do basic coding using natural language. The upshot is that software will be developed more rapidly and affordably, meaning that incumbents mustn’t rely on software features as key points of differentiation.

Reduced Energy Costs (REC) – Once solar cells are created, they can deliver power for decades, often with relatively little degradation in efficiency. Additionally, the cost-effectiveness and efficiency of the cells are rapidly improving, along with their ability to operate in semi-sunny conditions. The chart below maps the massive decline in cost.

Space Development (SD) – The cost of launching material into space has massively declined over the past several years as shown in the graph below⁵.

The implications of this development are vast. Just as the axiom of taking the high ground served most militaries well, the same is likely to be the case for the ultimate “high ground”. We expect space development to be critic in communications, defense, logistics, and a variety of other areas.

Impacted Industries

The much-lauded AI theme appears to touch the greatest number of industries and while not fully understood by most, is likely to continue to be in the news. An under-appreciated theme which we believe will have massive impact is improved robotics, particularly if teamed with AI and FSD, which appears highly likely.

Conclusion

Institutional risk managers and investors would be well-served to understanding and evaluate these pending developments. Rarely are the incumbents the major beneficiaries.