The year that GenAI became impossible to ignore

The technology sector led global equity markets higher last year, driven by a number of factors including better than expected growth, positive earnings revisions, improved margins and the increasing likelihood of an economic ‘soft landing’. However, the most important theme within technology was the proliferation, evolution and investment implications of Generative AI.

The Polar Capital Technology Team reflect on their decision to rotate decisively towards AI as a primary investment theme, exploring the multi-year implications of an AI infrastructure buildout and potential creation of entirely new markets.

Recent breakthroughs in generative AI are setting the scene for future disruption

Last year is best described as the year ‘risk was repriced’ as central banks moved forcefully to rein in the economy, defend their credibility and prevent inflation expectations becoming unanchored. But against a challenging backdrop for technology investors, businesses spending priorities remain well aligned with many of our key themes, and the strides made in the field of artificial intelligence have been both rapid and already widely felt, setting the scene for future disruption.

This year, the Polar Capital Technology Team explore the developments and potential implications of AI in depth, including how it will impact the core themes of the portfolio.

Reflecting on a year of two halves for the technology sector.

Unpredictable world events and changes in monetary policy have resulted in a drastically different environment for equity markets. Now more than ever, it is important to look ahead at the supportive trends that remain in place as technology disruption offers potential, long-term benefit to our shareholders.

This year, the Polar Capital Technology Team also discuss how the ambitious application of technology has a role to play in tackling the climate challenge whilst the Chair Elect, Catherine Cripps, outlines what she is most looking forward to as the incoming Chair of the Board.

A new work modality for the digital age.

With economies beginning to reopen and with investors focused on inflationary pressures as supply struggles to keep up with booming demand, we consider what lasting impact this potential new work modality might have on the world and, of course, on the investment backdrop.

The current crisis has shown the modern world is built on technology.

Trends we have witnessed and written about for many years have accelerated during the crisis, and many will remain at structurally higher levels once the crisis recedes.

This year, we draw on the parallel of television to help illustrate change happening within technology today and the acceleration taking place as a result of the COVID-19.  

Disruption is the zeitgeist of the current technology cycle and numerous industries are reinventing themselves through digital transformation to avoid becoming irrelevant, obsolete or disintermediated. 

As a result, IT spending on digital transformation in 2018 increased and budgets were allocated away from legacy areas towards next-generation software that is providing valuable building blocks for the digital economy.

Twenty years after the dawn of the commercial Internet, nearly every sector is now being challenged, improved or replaced by disruptive technology.

Digital transformation is no longer a 'nice to have' but has become a 'business imperative' as companies respond to the needs of a new generation of customers, partners and suppliers who expect transactions to be seamless, real-time, Facebook-like in experience, Amazon-like in reliability.

After years in the wilderness it is becoming increasingly clear that Artificial Intelligence (AI) and Machine Learning (ML) are emerging as the next great technology platforms.

This back-end infrastructure designed to garner insight from Big Data has captured the imagination of Silicon Valley and Wall Street alike.

2015 was the 'end of the beginning for cloud computing and the beginning of the end for traditional IT'.

As technology companies reinvest industries, create new markets and empower customers, we are excited about the new cycle and its impact on most industries now that the Cloud has made landfall.

All of the industry's incremental growth is being captured by new technologies and vendors.

Indeed, although there is no denying that most growth-challenged incumbents have become better stewards of capital, this has done nothing to alter our view that enterprise computing is looking increasingly anachronistic.

Fuelled by smartphone adoption, the Internet is becoming pervasive allowing the technology sector to 'reimagine' other industries. 

As the new technology cycle enters a second, more pernicious stage, disruptive technologies will begin to substitute, rather than merely complement existing ones. While this may result in a more challenging backdrop for incumbents, next-generation companies have much to gain, and little to lose from new cycle disruption.

The potential to extract value from the vast amount of untapped data in today's world has led some people to describe data as the next natural resource.

Just as finding new solutions to process today's datasets offers potential high rewards to entrepreneurs, so too does identifying those companies best placed to prosper in the new technology cycle to investors.

Dramatic improvements in cost and speed, together with the adoption of mobile computing, have made the internet as ubiquitous as air travel.

The internet. Mobile computing. Tablets. The Cloud. Technology companies aren't just changing the way we do business - they're revolutionising the way we live. To us, their investment potential is clear.

Just as the skyscraper ultimately changed the skyline, so we expect the cloud - and the mass production model it delivers - to transform the IT industry beyond recognition over the coming years.

Yet this is not necessarily good news for the best-known technology companies. Polar Capital Technology Trust plc looks beyond the major players...

We're in the midst of a new technology cycle, driven by cloud computing, internet applications and mobility.

Polar Capital Technology Trust plc seeks to capitalise on such cycles, by gaining exposure to exciting emerging themes and harnessing potential returns through investing in companies believed to have the highest growth potential from across the global technology spectrum.