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Future tech: Moonshots

Radical technologies could transform industries, economies and societies

 

IN MANY FIELDS AND INDUSTRIES, technological innovation is already happening at a faster pace than at any time in human history. But as profoundly as tech has changed our lives over the past couple of decades, the next 20 years could see even more dramatic disruption. Think about extending life spans to immortality, developing new processes that strip carbon out of the atmosphere, and much more. Then think about the likely effects innovations like these could have on a wide swath of industries, the global economy and investors’ portfolios.

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These far-reaching attempts to extend the limits of technology are referred to as “moonshots” by Haim Israel, Head of Global Thematic Investing Research at BofA Global Research. His recently published report, “To the Moon(shots)! – Future Tech Primer,” examines a number of areas in which disruptive technologies could galvanize markets. It also explains why being able to identify the moonshots that will hit their growth targets, and to strategically invest in them, could lead to outsized market returns.

 

Searching for opportunities

There’s a clear benefit to identifying and investing in innovative technologies, believes Israel. Historically, stock market gains are predominantly driven by the performance of a small number of disruptive companies. For example, between 1990 and mid-2020, the global stock market generated $56.2 trillion in net wealth,1 but all of that wealth creation has been generated by just 947 companies — or 1.5% of the total number.2 And this trend towards concentrated returns seems to be accelerating. Between 2016 and 2019, five companies accounted for 22% of net wealth concentration.3

Just 1.5% of all stocks have generated net wealth in the global markets since 1990

Bar garph for Share of net wealth genrated by stocks between 1990 & mid-2020. Source: H Bessembinder, Arizona State University 2020, net wealth accounts for wealth generated above the performance from one-month treasury bills.

Another insight to factor into investment decisions: the adoption of many technologies – smartphones and renewable energy, to name two – ended up surpassing experts’ forecasts by decades. That’s because people tend to think linearly, but progress often occurs exponentially. 

 

Haim Israel headshot
“The technologies that hit their growth targets have the potential to transform and disrupt multiple industries.”

— Haim Israel, Head of Global Thematic Investing Research, BofA Global Research

In Israel’s view, the disruptive technologies most likely to break through are the ones with a large enough potential total addressable market (TAM) size, a favorable place in the technological hype cycle (its expected growth and evolution over time), and the ability to achieve widespread adoption. His report compares risks, market sizes, growth rates, potential catalysts and more to provide a comprehensive overview and assessment of which technologies could take hold next.

 

The full report highlights 14 potential areas of disruption, which currently represent $330 billion in market size4 but could grow to as much as $6.4 trillion by the 2030s.5 Here are five of the efforts that could have an especially powerful impact on industries, the global economy and society.

 

Moonshot 1: Nextgen batteries

“Nextgen” batteries with greater capacity to store energy and recharge more quickly and cheaply are key to a cleantech revolution. Higher demand for passenger electric vehicles accounted for over half of global lithium ion battery demand in 2020, despite electric vehicles accounting for just 4% of passenger car sales.6 As the technology has improved and manufacturing capacity has increased, the average price of lithium ion batteries has dropped significantly. But in order to meet the anticipated growth in demand – and continue to bring costs down – a technological breakthrough will be necessary. One potential answer currently being explored is to replace liquid electrolyte with a solid alternative, thereby increasing energy density. If these solutions prove workable, BofA Global Research estimates that the market could hit $354 billion by 2030 – compared with $21 billion in 2020.7

 

Moonshot 2: Carbon Capture & Storage

The fossil fuel industry is looking to decarbonize and remain relevant as the world shifts to lower carbon technologies. That’s why carbon capture and storage is becoming increasingly important. This technology can remove carbon dioxide (CO₂) from the atmosphere by skimming and extracting it in a concentrated stream, which can then be compressed, transported and stored. For this technology, Haim sees a potential of $1 trillion in cumulative investments by 2040-2050.8

 

Moonshot 3: Immortality

Traditionally, aging has not been viewed as a treatable disease, but this is changing. Researchers in biogerontology — a sub-field of gerontology studying the biological processes of aging — believe that breakthroughs in tissue rejuvenation, stem cells, regenerative medicine, molecular repair, gene therapy, pharmaceuticals and organ replacement will eventually enable humans to have indefinite lifespans. Radical innovations in medical technology could result in a once-unimaginable increase in human longevity – to the degree that we could begin seeing the potential for immortality as early as 2029.9 Eliminating 50% of medically preventable conditions (i.e. cancer and hypertension) could extend an average person’s life expectancy to more than 150 years.10 When 90% of health problems are prevented, life expectancy could grow to over 500 years.11 The market for medical therapies and technologies designed to prevent aging is small now, but it could grow to $20 billion by 2025.12

 

Moonshot 4: Holograms

Up until this point, we mostly know human holograms as a technology that brings deceased performers “back to life.” But several intriguing applications are currently being explored across multiple sectors. One of the most interesting is the use of holograms for conferencing and cyberspace collaboration in a post-pandemic work environment that minimizes personal contact. Someday employees may be able to simply call up colleagues, business partners and clients to gather using 3D images in a shared holographic space. With a number of other natural extensions of this innovation – doctors are now examining vital organs in 3D without having to cut into a live body – the market could reach $11.65 billion by 2030.13

 

Moonshot 5: 6G

The frequency 6G will be the successor to 5G mobile technology in the transmission of mobile data. The timeline for mobile technology has been about 10 years, but the amount and complexity of data continues to explode exponentially – meaning that 5G will reach its upper limits before the end of the decade and need to be replaced by the next generation. While 6G can offer speeds between 10 and 50 times faster than 5G, speed alone does not paint the full picture. Critically, 6G could have the capacity for all of the data we’re creating, allowing applications to “talk” to each other — including linking up all the data needed for, as an example, autonomous driving — and adopting AI-embedded machine learning algorithms that can channel data and maximize network traffic.

 

Israel notes that “all of these moonshots come with risks, including delays in development, costs that could turn out to be insurmountable, and new regulatory hurdles.” Still, he says, “some of these technologies are bound to hit their growth targets, and the ones that do have the potential to transform and disrupt multiple industries.”

 

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*Source: Ray Kurzweil, Singularity

1H Bessembinder, Arizona State University, 2020

2H Bessembinder, Arizona State University, 2020

3H Bessembinder, Arizona State University, 2020

4BofA Global Research estimate

5BofA Global Research estimate

6Bloomberg NEF

7BofA Global Research estimate

8BofA Global Research estimate

9Ray Kurzweil, Singularity

10Ray Kurzweil, Singularity

11Ray Kurzweil, Singularity

12UFX / Inc.com

13Allied Market Research

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