As many try to seek out the next big growth idea, investors may consider an exchange traded fund that provides exposure to far-reaching software developments in deep learning.
On the recent webcast, Understanding the Investment Opportunity of Deep Learning, Catherine Wood, Chief Investment Officer and CEO ARK Invest, argued that innovation is the key to growth and investors should invest in leaders, enablers and beneficiaries of disruptive technologies.
James Wang, Next Generation Internet Analyst at ARK Invest, explained that many are acquainted with classic artificial intelligence as based on deductive logic where rules are based on human ingenuity. As the space evolves, we now have machine learning, which is based on statistical inference or rules are inferred from data.
Deep learning is seen as a type of machine learning inspired by the biological brain. For example, services like AlphaGo, Sky translator and Tesla auto pilot can be categorized as deep learning. As the world grows more integrated, deep learning is also finding its way into various industries, such as transportation, robotics, radiology, semiconductors and retail.
Looking ahead, ARK projects deep learning could generate $6 trillion in revenue by 2027, Wang said. Globally, deep learning could approach a $17 trillion market cap in 20 years, or the equivalent of 35 Amazon-sized companies.
Those interested in accessing the potential growth opportunity of deep learning can look to something like the ARK Web x.0 ETF (NYSEArca: ARKW), an actively managed ETF that focuses on disruptive companies that help transform the market.
ARKW provides thematic multi-cap exposure to fast moving and innovative technologies, seeks to capture long-term alpha with correlation to traditional growth strategies and negative correlation to value strategies, and offers a way to diversify due to little overlap with the broader market indices, which may help it complement traditional value/growth strategies.
“The ARK Next Generation Internet Strategy recognizes that the internet is transforming every sector of the economy. The strategy focuses on the disruptive innovations that are changing the way the world manages information, analyzes data, purchases goods, and communicates across the globe,” Wood said.
Specifically, Wood pointed out that ARKW provides exposure to 11 names with strong exposure to deep learning, such as Amazon (NasdaqGS: AMZN), Tesla (NasdaqGS: TSLA) and Alphabet (NasdaqGS: GOOGL), among others. Additionally, the active ETF holds 15 names with moderate exposure and 13 names with low exposure.
Financial advisors who are interested in learning more about the Deep Learning opportunity can watch the webcast here on demand.