Supertrends 2022 Credit Suisse— (#3)Technology — at the service of humans


This is an excerpt of the report “Supertrends 2022 — Here to stay. From societal trends to investor impact.” , with the title above, focusing on the topic in question. 

The 1st part of the excerpt reproduces the Introduction of the full version of the report. The 2nd part, contains the excerpt of the “Technology” chapter.


Credit Suisse
Michael Strobaek; Uwe Neumann
; Nannette Hechler-Fayd’herbe, Daniel Rupli
July 2022


Excerpt by


Joaquim Cardoso MSc.
Health Revolution — Institute

Institute for better health, care, costs, and universal health.
Supertrends — Unit
July 1, 2022



The COVID-19 pandemic and, more recently, Russia’s invasion of Ukraine have led to greater volatility in financial markets, putting our Supertrends long-term equity thematic framework to the test. 


We designed our Supertrends to transcend business cycles in order to offer investors multi-year equity investment opportunities. 

This means that fluctuations in short-term sentiment and financial market volatility, as we saw during the first quarter of 2022, do not significantly affect our long-term overall conviction across our Supertrends. 


… fluctuations in short-term sentiment and financial market volatility, as we saw during the first quarter of 2022, do not significantly affect our long-term overall conviction across our Supertrends.


That said, short-term catalysts tend to favor some Supertrends over others. 

Investors have thus adopted a dynamic approach to our Supertrends, i.e., giving a greater weighting to certain Supertrends compared with others in portfolios — just as they would with equity investments across regions or sectors. 

The diversification of the framework — across 23 subthemes and six Supertrends — also helps to cushion the impact of sector rotations.


We continue to develop our Supertrends. In 2021, we took an important step and mapped all of the themes to the United Nations’ 17 Sustainable Development Goals (SDGs). 

The SDGs represent a guiding principle for economic activity and development and, increasingly, investing. 

In order to capture this link effectively, we track the progress of the overall UN SDG framework and closely monitor the alignment of our investment themes and stock selection with the SDGs. 

With regard to the single stocks within our Supertrends, for example, we track the monthly SDG scores since our frameworks’ inception using MSCI environmental, social and governance (ESG) data.


We have observed stable to positive (albeit slow) progress overall; it is encouraging to see our Supertrends contribute positively to broader development goals while delivering returns to investors. 

Our Climate change Supertrend — unsurprisingly — has shown the most progress, with solid improvements in SDG 7 (affordable and clean energy), SDG 9 (industry, innovation and infrastructure) and SDG 13 (climate change) scores. 

Looking at the other Supertrends, companies within our Millennials’ values, Infrastructure and Technology Supertrends also improved their sustainability scores, …

… while the scores of Anxious societies and Silver economy moved sideways.


Our Climate change Supertrend — unsurprisingly — has shown the most progress … 

… companies within our Millennials’ values, Infrastructure and Technology Supertrends also improved their sustainability scores, …

… while the scores of Anxious societies and Silver economy moved sideways.


The Supertrends offer an opportunity to help investors reach their financial, societal and environmental goals. As more and more investors move in this direction, we believe our Supertrends are here to stay.



  • 1.Anxious societies — Inclusive Capitalism
  • 2.Infrastructure — Closing the gap
  • 3.Technology — At the service of humans
  • 4.Silver economy — Investing for population aging
  • 5.Millennials’ values — Gen Z and Y
  • 6.Climate change — Decarbonizing the economy

Supertrends — Creating impact


The year that has passed since our last publication has once again confirmed the relevance of our Supertrends. 

Equity investors benefited in 2021 from the strong global economic recovery and investment returns that were substantially above their historical average. 

Our Supertrends even managed to outperform the MSCI World. Yet there were clear differences in performance across styles and sectors. 

Our Infrastructure and Climate change Supertrends, for example, benefited in particular from solid tailwinds in 2021 due to large-scale infrastructure projects, as well as political support for climate change action at key events like the COP26.


Turning to the current year, investors should expect lower returns, in our view, as companies and consumers grapple with the highest inflation in decades. 

In the last quarter of 2021 and the first quarter of 2022, investors started to rotate into value stocks from growth stocks, with the energy and financial sectors making up some lost ground in recent months.


Turning to the current year, investors should expect lower returns, in our view, as companies and consumers grapple with the highest inflation in decades.


Our strong diversification approach across the 23 Supertrends subthemes is helpful when navigating turbulent markets. 

We believe that our more defensive Supertrends, as well as the long-term demographic trends in our Silver economy Supertrend, should prove less volatile this year than the growth-style themes in Millennials’ values and Technology. 

The Silver economy focuses on healthcare companies that will likely benefit from rising demand and strong earnings growth as societies age. 

Therapy areas of particular importance include cardiovascular disease, oncology and neurology. 

Outside of the healthcare sector, the Silver economy also has exposure to financial companies, which should benefit from the (higher) interest rate environment, along with selected consumer names.


The Silver economy focuses on healthcare companies that will likely benefit from rising demand and strong earnings growth as societies age.

Therapy areas of particular importance include cardiovascular disease, oncology and neurology.


Earlier this year, geopolitical tensions put the Personal security subtheme within our Anxious societies Supertrend back into focus. 

Cyber security in particular remains a key conviction, so do our Affordability and Employment subthemes. 

The recent spike in inflation has ushered in more challenges to affordability, especially for housing and food, paving the way for companies that can address this challenge.


Inflation tends to be positive for the infrastructure sector — and our Infrastructure Supertrend — because companies in the transportation and regulated utilities industries have price escalators (linked to the consumer price index or a sector-specific measure of inflation) embedded within their contracts. 


We also expect a positive impact from the removal of COVID-19-related travel restrictions, which should provide another boost for domestic toll road operators as well as international air travel investments. 

From a political standpoint, COP26 highlighted the climate change challenge and we anticipate the further buildout of renewable energy infrastructure (e.g., solar and wind farms) and smarter electricity networks to remain a top policy goal for many governments.


Germany’s new coalition government will be taking the lead in Europe, while a possibly scaled-down version of US President Joe Biden’s stalled Build Back Better plan would support investments for renewable energy, energy-efficient housing and electric vehicle (EV) infrastructure in the USA. 

This should give our Climate change Supertrend another boost in terms of its growth-style themes, including CO2-free electricity and sustainable transport.




EXCERPT : Technology — At the service of humans


Technology — At the service of humans


Uwe Neumann
Senior Equity Analyst, Technology & Telecom


Starting in November 2021, technology stocks have repriced to reflect a higher interest rate world, as well as the fact that the very high growth rates during the pandemic will not likely be sustainable going forward. 

Yet the digital revolution still has far to go. 

New catalysts are giving impetus to our Technology at the service of humans Supertrend, as new digital worlds (i.e., the Metaverse), emerge and create new business opportunities. 

Data privacy and protection is another growing area, as consumers become more aware of its importance. 

The result is an ongoing rebalancing of human activities across real life and digital platforms in ways that enhance customer experience, safety and convenience.


Starting in November 2021, technology stocks have repriced to reflect a higher interest rate world, as well as the fact that the very high growth rates during the pandemic will not likely be sustainable going forward.


The result is an ongoing rebalancing of human activities across real life and digital platforms in ways that enhance customer experience, safety and convenience.



Ones to watch

·

  • Software, IT services and platform companies that support the transition of networks from enterprises to the cloud and offer network security and industry automation processes.
  • Companies with strong exposure to the rollout of 5G networks/devices that help accelerate the adoption of virtual reality (VR) and augmented reality (AR) applications. Firms that increase efficiencies through the application of VR/AR and thus enable the Metaverse.
  • Providers of artificial intelligence (AI) solutions and services for healthcare and education, among other areas.
  • Companies focused on industrial automation solutions and the manufacturing of collaborative robots; providers of quantum technologies.
  • Companies in the healthcare sector that use digital technology, robotics and big data analytics to improve execution in diagnostics, therapeutics, sequencing, mRNA technology and care.



  • 1.Digitalization — Meet the Metaverse 
  • 2.Virtual reality — Living in a virtual world
  • 3.Artificial intelligence — Digital age workhorse
  • 4.Industry 4.0 — Smarter supply chains
  • 5.Healthtech — Now entering the hologram


1.Digitalization — Meet the Metaverse


The digitalization trend has clearly gained momentum during the pandemic, as technology makes further inroads into our daily lives.

Remote working, video collaboration, online shopping, virtual doctor visits, and the use of augmented reality-based advice to provide remote maintenance services for machines helped make our lives easier during a difficult time.

As a result, IT spending by enterprises is growing steadily. One area that shows accelerating growth coming out of the pandemic is cloud investments.

By 2025, 51% of IT spending in application software, infrastructure software, business process services and system infrastructure markets will shift from traditional solutions to the cloud, up from 41% in 2022, according to estimates published in February 2022 by the technology research firm Gartner®17.

This means more than USD 1.3 trillion in enterprise IT spending is at stake in 2022, rising to nearly USD 1.8 trillion in 2025, according to Gartner®.



Source Gartner® (February 2022)A, Credit Suisse


Another promising source of growth for the digitalization investment theme is a digital ledger technology-based Metaverse, which should contribute to rising demand for IT infrastructure, processing power, advertising, digital payments and social media. Companies that can adapt their business cases to these new technologies will likely gain a competitive advantage.

The use cases in the Metaverse are manifold for both consumerand enterprise-focused businesses. Advances in work collaboration, social media, entertainment, virtual worlds, education, fitness, design or e-commerce are already visible, and sectors such as healthcare, real estate and manufacturing could be among the beneficiaries.

Indeed, there is an atmosphere of transformation like in the 1990s with the dawn of the internet era.

Many new players have entered the market over the past two years, underscoring the renewed “entrepreneurial spirit” within the sector.

Established companies — both in the IT sector and beyond — are preparing for the Metaverse. For example, a French financial services provider developed with Unity Software a 3D-augmented simulation tool that enables real estate clients to visualize the city of Paris in the past, present and future, helping to improve the development, management and sales activities within its real estate department.

Facebook, renamed Meta Platforms, sees the Metaverse as a natural evolution of the internet to Web 3.0 from Web 2.0.

Another area of focus within the digitalization trend is the “end of cookies era” as consumers and businesses become more sensitive about data privacy.

Since Apple offered its users the possibility to remove the IDFA (Identifier for Advertisers) on their smartphones in 2021, companies have started to invest in new customer data platforms (CDP) that do not use cookies but instead leverage existing data about customers. CDPs have the potential to be the foundational software layer for an application’s entire front office, acting as the “brain” that can make decisions to not only improve customer experience but also make it hyper-personalized.

The collection, management and analysis of data is entering a new dimension and thus a multi-year secular growth phase for players in this area (mainly the software sector).



2.Virtual reality — Living in a virtual world


The rapid emergence of the Metaverse is currently visible in virtual game worlds, virtual concerts/events and, increasingly, non-fungible token-based transactions.

It has led to rising demand for quality content that could help companies attract more customers in a world where people are more and more willing to shift some of their real-life activities to a virtual environment.

Virtual worlds have so far been synonymous with gaming and thus deals on content such as Microsoft’s acquisition of Activision Blizzard or Discovery’s acquisition of WarnerMedia appear to be a precursor to a parallel business, sports or entertainment world in the future.

While it is still early days, we believe the Metaverse could be an extension of virtual reality (VR) and augmented reality (AR) with some gaming and e-commerce aspects.


One example that highlights the immense scope of VR/AR tech is a privately owned company called XYZ Reality, which has designed an augmented reality device for the construction industry that indicates when a building or machine construction/design deviates from the original plans and helps construction managers rectify the issue.

Large-scale innovations, however, are still being driven by the deep-pocketed tech players.

Meta Platforms, for example, reported strong traction for its virtual reality headset Oculus Quest 2 in Q4, and said that users had spent more than USD 1 billion on Quest store content since its launch — a development that bodes well for content companies.

Meta is also making progress toward Project Nazare, its first fully AR glasses.

AR glasses will act as an interface and a medium to access the Metaverse and are thus expected to play a very important role in its growth.


Metaverse fuels growth in AR/VR headset market


Source IDC, Credit Suisse



3.Artificial intelligence — Digital age workhorse


The pandemic has proven to be a massive disruptor in terms of many traditional businesses during the past two years.

At the same time, it has acted as a catalyst for digital technologies, in particular artificial intelligence (AI), machine learning and data analytics. Consulting firm McKinsey & Company’s 2021 survey (The State of AI in 2021) found that 56% of survey respondents reported AI adoption in at least one function, up from 50% of respondents in 2020 18.

In addition, more respondents reported that AI contributed to their bottom line.

That being said, we may still be some distance away from realizing the full potential and widespread adoption of AI, as building sizeable AI capabilities requires significant investment, AI talent and computing power.


While hyper-scale providers have somewhat bridged this gap, we believe there is tremendous growth ahead.

Putting this opportunity into perspective, worldwide AI software revenue should expand by 21% to USD 62.5 billion in 2022, with growth coming from software demand for autonomous vehicles, virtual assistants and knowledge management, among other areas, according to a Gartner® forecast 19.


While we expect AI to create great value in the near future, it has already made substantial inroads in recent years.

Amazon recently announced that Amazon Web Services (AWS) and Gilead Sciences have agreed to collaborate on the development and delivery of new medicines to patients by using AWS’s machine learning and analytics to improve clinical trial design and advance data-driven decision making.

In the gaming world, Sony has developed an AI-based agent (Gran Turismo Sophy) to make its Gran Turismo racing simulator game more realistic.

The program trains users continuously through deep reinforcement learning and provides an enhanced competitive environment compared to traditional gaming.

Sony believes this innovation should open up new opportunities in areas such as autonomous racing and driving, high-speed robotics and control.

Overall, we believe that AI adoption will continue to expand due to its potential to fuel innovation, increase scale, reduce costs and accelerate growth.



4.Industry 4.0 — Smarter supply chains


The start of the COVID-19 pandemic in 2020 was followed by significant disruptions to supply chains.

Both developments highlighted the importance and need for greater investment in digitalization.

Building out capabilities for remote working, digital salesrooms or virtual prototyping, as well as increasing the digital expertise of a company are strong trends that have emerged from the COVID era.

Digitalization is also becoming a factor in environmental, social and governance (ESG) criteria, and it is clear that the “smart factory of the future,” including supply chains, should also focus on sustainability.

New technologies including big data analytics, the cloud or the Internet of Things (IoT) are needed to transform a company to a smart (i.e., sustainable) supply chain, as well as provide more exact, predictive information about the behavior of consumers, employees and business partners.

According to a McKinsey survey of senior supply chain leaders in 2020, 85% of respondents said they had inefficient digital technologies in the supply chain and 93% said they plan to boost resilience across their supply chain through measures including introducing advanced analytics and adding to their digital supply chain talent 20.

Apart from the increased focus on sustainable supply chain investments, the rising usage of 3D digital twins (virtual models designed to accurately reflect a physical object) also remains a strong source of growth for more immersive collaboration, interactive 3D shopping capabilities, simulation & robotics or real-time asset operations.


Relatedly, the “Great Resignation” wave during the pandemic has led to tighter labor markets, but we believe it will be highly positive for automation and robotics industries as employers adopt these technologies to increase productivity and avoid future disruptions.

Robots today man warehouses, deliver food and merchandise, help to perform surgeries and advise financial customers: they are expected to create meaningful competitive advantages for the companies that deploy them.



5.Healthtech — Now entering the hologram


Innovation in electronic devices that integrate AI (e.g., natural language recognition), AR or new sensor technology is driving consumer interest in wearables to track their health in real time.

The use cases for wearables, however, are expanding into other areas.

When Alphabet announced the acquisition of Fitbit in 2019, the use case evolved from measuring fitness activity to a lifestyle device that can help prevent disease or maintain good health, for example controlling weight or monitoring physical activity.

Indeed, diagnostic and therapeutic purposes aimed at providing more personalized healthcare are the new frontier for wearables.

In addition to sleep and neuro-monitoring devices, electrocardiographs, pain management and respiratory therapeutic devices, a wide range of new low-cost wearables that can assess various physical quantities has been developed during the pandemic.

For example, clothing that can detect when certain molecules or biomarkers are present in sweat; face masks that analyze breath and can detect airborne diseases; and contact lenses that can measure the pressure of fluid inside eyes.

Using several of these devices in combination with telemedicine could help create a clearer picture of a patient’s health and may lead to cost reductions in the healthcare system.

According to estimates from ResearchandMarkets.com, the global wearable medical devices market should rise to USD 24.38 billion in 2025 from USD 10.28 billion in 202121.


Telemedicine is another important driver of growth in health-tech, including surgical robots and the use of AI for drug development.

For minimally invasive surgical interventions, the first 3D holoscope from the company RealView, which has received US Food and Drug Administration approval, generates real-time holograms from standard 3D imaging sources. These can be used for operations or education purposes.


Tracking duel — Fitness trackers vs. smartwatches

Source CCS Insight, Credit Suisse

Real-time 3D holoscope

Source Credit Suisse


About the authors


Michael Strobaek,
Global Chief Investment Officer, Credit Suisse

Uwe Neumann, Senior Equity Analyst, Technology & Telecom

Nannette Hechler-Fayd’herbe, Head of Global Economics & Research, Credit Suisse

Daniel Rupli, Head of Single Security Research, Credit Suisse


Originally published at https://data.maglr.com

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