The Driverless CopyPortfolio Investment Strategy is Your Chance to Invest in the Future of the Automobile Industry

The “smart” revolution is all around us, as a growing number of common items are becoming highly technological. It happened with the telephone, it happened with TV, it happened in numerous fields of industry – and now it’s happening in the automotive industry. Self-driving cars are very much a reality, and we will be seeing them in rising numbers on the road within the next few years. This evolution of the personal car, which over the years incorporated more and more technology into it, has resulted in a vehicle that no longer needs a human driver – and the financial potential is incredible.

The driverless car will be one of the most tech-heavy products available to consumers, and as such, will combine numerous components from both automakers and high-tech companies. To learn more about the different aspects of the autonomous car industry, projected to become a $7 trillion market(1) eventually, read this blog post.

Being such an innovative field on the one hand, yet being developed by some of the world’s largest, and most recognizable, companies on the other, the driverless car industry presents an interesting thematic investment opportunity. However, since it involves companies from different industries, operating in various markets around the world, building a thematic investment portfolio to track the industry can be challenging. That is why, here at eToro, we are launching the Driverless investment strategy, through which the members of the eToro community can invest in this sector.

The Driverless CopyPortfolio: Composition

This managed portfolio strategy contains an array of global companies, ranging from automakers, through hardware manufacturers, to software companies developing computer vision, navigation systems and other solutions relevant to the sector. The companies span several industries and have an overall impressive global presence – and are all part of the trend that will make driverless cars a common part of our daily lives in the coming years:

Car Manufacturers

  • Tesla (TSLA) – Elon Musk’s electric car company has established itself as one of the most intriguing players in both the tech and automotive industries in the US. The company is developing driverless cars and trucks and is one of the pioneers in automotive innovation.
  • Fiat Chrysler (FCA.MI) – One of the largest automotive corporation in the world, Fiat Chrysler has a strong presence in both the North American and European automobile markets, and is working on its own self-driving car.
  • Toyota (TM) – The world’s largest automakers, Japanese Toyota is known to be a highly reliable carmaker, have a strong international presence, and pioneering innovative technologies, such as one of the world’s first mass-produced hybrid personal cars.
  • Honda (HMC) – Another Japanese carmaker, Honda’s name has also become synonymous with quality, for both family cars and high-end sports cars and luxury sedans. Honda is also working on a driverless car, declaring 2025 as the target year for a nearly fully-autonomous vehicle.
  • Ford (F) – The world’s first automotive company is still one of the most influential carmakers out there. The company has announced plans for robot cars for ride-hailing and delivery purposes and will be testing them in Miami in the near future.
  • Renault (RNO.PA) – The French car giant has taken great strides in the autonomous car department: Its Symbioz concept model has generated positive reviews, both for its extremely advanced artificial-intelligence-assisted driving and its innovative approach of including the smart car as an integral part of the smart home of the future, positioning it as a notable player in the industry.
  • BMW (BMW.DE) – The German luxury car maker is a prominent player in driver-assistance technology, such as self-parking systems, which exist in some of its high-end brands. Therefore, it is no wonder that the company has been very public about its plans for creating a completely autonomous vehicle in the future.
  • Volkswagen (VOW3.DE) – Pledging to add electric motors to all of its models by 2030(2), this German giant is also researching completely autonomous cars. The VW I.D. Vizzion concept model unveiled by the company is a fully self-driving car, that doesn’t even have a steering wheel or pedals – it is designed to do all of the driving for the passenger.
  • General Motors (GM) – The largest car manufacturer in the US, GM is no stranger to innovation. In the early 1990s, GM completed the development of the world’s first serial electric car, the EV1. Despite later being pulled from production, GM has proved that it is ready for big changes in serial manufacturing – a quality that will serve it well when the market tilts towards the driverless.
  • Tata Motors (TTM) – India’s largest car manufacturer, which is part of a $151 billion conglomerate, is actively testing autonomous micro-cars. According to Tata, it might be one of the first companies to roll out mass-produced self-driving cars.
  • Caterpillar (CAT) – One of the largest heavy industry vehicle manufacturers in the world, Caterpillar is developing driverless trucks that could revolutionize many industries. In fact, the company is no stranger to automation, as several of its products already include self-driving trucks and other heavy vehicles, used by mining and construction companies around the world.
  • Delphi (DLPH) – This auto parts company is one of the world leaders when it comes to electrical systems and software for vehicles. Its products could play an instrumental part in the linking of cars to advanced computer system required for autonomous driving.
  • Ferrari (RACE) – The Italian supercar’s name is synonymous with luxury and speed. While it has distanced itself from the autonomous car space, it did declare that it is working on a fully electric supercar, which will rival the likes of Tesla.
  • Volvo (VOLV-A.ST) – Swedish carmaker Volvo already has high-tech driver-assistance solutions in some of its models, which is a significant step in the direction of a fully autonomous vehicle.

Software Companies

  • Alphabet (GOOG) – Google’s parent company is also the owner of Waymo, a company who already has self-driving cars roaming the streets of Silicon Valley. Unlike some other tech companies, who’ve kept their progress under wraps, Waymo has been very public with its driverless car prototypes and their performance.
  • Alibaba (BABA) – The Chinese retail giant is known for its massive interest in technological innovation. Therefore, it is no wonder that the company has confirmed that it is also in the race for developing a self-driving car, alongside other tech companies.
  • Baidu (BIDU) – Perhaps one of the strongest competitors in the race of launching the first road-ready autonomous car, Baidu has enjoyed the support of the Chinese government and is manufacturing and testing autonomous cars and buses. According to the company’s Apollo project timeline, Baidu will have a fully autonomous car ready for mass production by 2021.
  • Microsoft (MSFT) – One of the largest tech corporations in the world, Microsoft is also heavily involved in implementing its technology in driverless cars. Some of the cars that use Microsoft’s technology are already being tested in several locations around the world.
  • Blackberry (BBRY) – The former smartphone giant has pivoted into other areas in recent years, including software development. Blackberry is developing software that will be used in the autonomous car industry and has a partnership in place with Chinese giant Baidu.
  • Intel (INTC) – According to the company, Intel has a chip in virtually every self-driving car that is being tested today. Moreover, the company strengthened its grip on the market by acquiring Mobileye, a startup which develops computer vision driver-assisting technology, for a whopping $15 billion.

Hardware Manufacturers

  • Apple (AAPL) – The world’s largest company has a strong presence in numerous fields of technology – and autonomous driving is no exception. Apple has been quite secretive about its driverless plans, but reports suggest the company is developing a brand new self-driving car of its own.
  • Nvidia (NVDA) – Since an autonomous car requires great computing power, it is in need of strong processors. Nvidia is one of the world’s leading manufacturers of processors for some of the most performance-based computer functions, such as the real-time rendering of graphics-heavy computer games. Therefore, it is only natural that the company will also be taking part in making processors for self-driving cars.
  • STMicroElectronics (STM.MI) – Europe’s largest semiconductor manufacturer, ST is also one of the companies taking part in creating the computerised “brains” that will steer the cars of the future.
  • Infineon (IFX.DE) – This German chipmaker is developing semiconductors used in both driver-assistance systems and driverless cars. Teaming up with leading car makers, such as German luxury brand Audi, Infineon could serve a major role in the future of the automotive industry.
  • Texas Instruments (TXN) – Developing semiconductors and various sensors for more than 80 years, Texas Instruments is making its way into the autonomous driving realm. In 2017, the company unveiled a new array of sensors that can be used for autonomous cars, drones and more(3).
  • Advanced Micro Devices Inc (AMD) – A power player in the microchip industry, AMD is known for offering computing solutions that are more affordable than its main competitors, without compromising on performance. The company started hiring personnel for its AMD automotive department, which strongly suggests it is venturing into the field.
  • Dialog Semiconductor (DLG.DE) – This German semiconductor manufacturer has reportedly been involved in the early stages of Apple’s self-driving cars. While currently it seems that Apple chose to go another way, Dialog does have the capability to become a leading developer of hardware for autonomous vehicles.
  • MaxLinear (MXL) – Developing hardware such as semiconductors and radio transmitters, this American company is directing some of its efforts into developing components to serve the self-driving car industry.
  • NXP Semiconductors (NXPI) – This Dutch semiconductor manufacturer already has a strong foothold in the autonomous car industry, as it is one of the companies chosen by Chinese Baidu to help construct its driverless cars.
  • Skyworks (SWKS) – Based in the US, Skyworks Solutions has manufactured some wireless transmitters that are being used for autonomous features in current cars. The company’s experience in the field could serve as a strong foundation for its future business in the driverless car space.
  • HELLA (HLE.DE) – A well-known supplier of parts and subsystems for the automotive industry, HELLA has announced that it is strategically entering the driverless space in 2018(4).
  • EnerSys (ENS) – This battery producer has its products powering numerous cars and aerospace vehicles. As the automobile market shifts towards being driverless and electric, EnerSys could be a dominant player, producing the batteries powering these vehicles.
  • Visteon (VC) – This car electronics and computing company spun off from Ford in the year 2000. Visteon has developed a unique platform for driverless cars, which enables the car’s computer to decipher its surroundings and drive itself.

Each stock within the investment strategy’s composition is given equal allocation, and it is rebalanced by the eToro Investment Committee periodically. The minimum investment using the Driverless investment strategy is $5,000.

Investing in the self-driving car industry

It is obvious that there are numerous players and various companies operating in the driverless car space. In coming years, it is likely that more companies, both existing and new, will join the industry, while the autonomous car becomes a mass-produced, global phenomenon. As the industry takes form, eToro enables you to become part of the first wave of investors to take part in this exciting new automotive/technology sector. Using the Driverless CopyPortfolio, you can access a fully allocated, managed investment portfolio and gain exposure to the autonomous car industry.

IoT Platform Wars Have Begun, Blockchain Might Foster a Win-Win for All Stakeholders

Internet of Things (IoT) is here to stay because big data is the future of business and IoT provides a seamless way to gather this data. IoT simply refers to billions of devices connected to the Internet, assigned IP addresses to actively collect and share data. IoT can effectively transform otherwise “dumb” devices into smart devices that could take part in both machine-to-machine communications and machine-to-human communications for a seamless merger of digital and physical words.

Analysts at Gartner expect that the IoT industry will continue to grow and the number of IoT devices in use will reach 20.4 billion by 2020. The analysts also noted that total spending on IoT endpoints and services will reach $2.9 trillion by 2020. Interestingly, getting consumers to ditch their current devices in favor IoT enabled devices still appears to be an uphill task. This piece provides insight into how blockchain could facilitate the faster adoption of IoT in the mass market.

The platform wars in IoT

In mobile technology, the war of platforms is predominantly between Apple’s (NASDAQ:AAPL) iOS and Google (NASDAQ:GOOGL)’s Android OS. In the desktop, the platform battle is predominantly between Microsoft Corporations (NASDAQ:MSFT) Windows and Apple’s MacOS. In gaming, there’s an ongoing platform war between Microsoft’s Xbox and Sony’s PlayStation.

Interestingly, in the IoT segment, there are many different platforms – the likes of IBM, Microsoft, GE, Bosch, Siemens and hundreds of emergent start-ups are trying to build the market-leading IoT platform.

Unfortunately, the fragmented nature of the IoT platform market also makes it hard for OEMs (original equipment manufacturer) to know which platform would make the best business sense for IoT integration with their devices. The current conundrum of the IoT platform wars is that OEMs don’t want to build devices for a platform that doesn’t have any existing users. The fact that OEMs are cautious about pitching their tent on a platform that doesn’t have users also means that IoT devices aren’t being produced as fast as one would have imagined.

Blockchain could incentivize a faster adoption of IoT in the mass-market

Blockchain technology in practical terms is a decentralized network on which users can transfer unique pieces of digital property to other users with the guarantee that the transfer is secure, visible to everybody on the network, and such that the legitimacy of the transfer cannot be challenged. Blockchain technology could encourage data-sharing that would facilitate the mainstream adoption of IoT systems.

A blockchain-based platform could be open sourced, making it easy for all OEMs to build devices that can be integrated to function in an IoT marketplace without being forced to adopt a protocol from any single platform. For instance, blockchain-based IOTW is a platform trying to transform all IoT devices into micro-mining rigs for the cryptocurrency. Many of the existing devices are being retroactively outfitted with IoT capabilities. However, these devices often end up running outdated software that requires consistent manual patches and upgrades.

With IOTW, users don’t need to buy new hardware or commit to repetitive software upgrades on their existing devices. All that is required for existing devices to connect to the IOTW ecosystem is a firmware upgrade from an open SDK solution. Interestingly, once the device is turned on, it will serve the dual purpose of participating in an IoT marketplace and mining cryptocurrencies without any significant increase in power consumption.

More interesting is the fact that IoT device owners will be rewarded with IOTW coins for participating in its data marketplace. The coins can then be used to buy media content, services, or goods in open markets. Device owners can also leverage the coins to pay for services or spare parts on their devices. The IOTW is based on the Ethereum platform and can be exchanged with Ether coins.

2 stocks facilitating growth in the IoT Space

While most IoT companies come out with promises of how they intend to take over the world with their futuristic projects; investors can look at opportunities to make short, medium, and long-term plays. Below are 2 IoT stocks to add to your watchlist as we head into Q4 2018.

Intel Corporation (NASDAQ:INTL)

Intel Corporation (NASDAQ:INTL), is the second largest and highest valued semiconductor and chipmaker in the world. Intel has a strong footprint in the global IoT market, having unveiled its IoT platform for coordinating and managing the security and connectivity of connected devices in 2014. Over the last three years, Intel has worked with some of the largest tech firms to integrate Intel IoT platform with open standards for increased interoperability.

Intel Chart
Intel Chart

In the last three year since launching its IoT division, the shares of Intel have climbed by 74.31% and its quarterly revenue has surged 17.26% as seen in the chart above. In Q2 2018, Intel reported earnings of $1.04 per share on revenue of $16.96B. The reported top and bottom line did outperform the consensus analysts’ estimate of earnings of $0.96 per share on earnings of $16.77B. For what it’s worth, Intel has consistently delivered a positive surprise on price and EPS estimates in the last three quarters.

Texas Instrument Incorporated

Texas Instrument Incorporated (NASDAQ:TXN) is another major stakeholder in the global IoT market. In 2014, Texas Instruments cemented its presence in the IoT space when it introduced its Internet of Things (IoT) ecosystem for third-party cloud providers to enable devices manufacturers to use it’s TI technology to connect to the IoT more easily and rapidly. By leveraging Texas Instruments’ processors, a microcontroller (MCU), and wireless connectivity solutions; companies such as LogMeIn, IBM, Spark, Thingsquare, ARM, 2lemetry, and ARM have been able to launch a wide cross-section of IoT solutions across multiple sectors.

Texas Instruments
Texas Instruments

In the last 4 years of launching its IoT ecosystem, the shares price of Texas Instruments has surged by 147% and its quarterly revenue has increased by 14.74% in the same period as seen in the chart above. In Q2 2018, Texas Instruments reported earnings per share of $1.40 on revenue of $4.02 billion to beat the consensus analyst estimate of earnings of $1.30 per share on revenue of $3.96 billion. It is also important to note that Texas Instruments has consistently delivered a positive surprise on price and EPS estimates in the last three quarters.

What’s Next for Tech Stocks?

In the last week, Facebook Inc. grabbed the headlines once more and once again for all the wrong reasons, with Facebook’s market cap tumbling by over $100bn to sit just above $500bn, as Facebook shares slumped 19%, the market cap collapse being the largest in U.S market history, outdoing Intel’s $90bn tumble in the bubble bursting end of the dotcom era.

Tech Stocks Contagion

FAANG has taken the headlines by storm ever since the U.S equity market rally began, largely in response to the U.S Presidential Election result back in late 2016 and members of the FAANG group have certainly been a major influence in the direction of the broader tech sector and the major U.S and global indexes.

Facebook, Amazon, Apple, Netflix, and Google make up the grouping and the 5-stocks, alongside a more seasoned Microsoft, have continued to ultimately direct the tech sector, not just in the U.S, but also in Asia, where listed companies have significant reliance as a result of partnerships or sales revenues from one of the FANG Members.

Tech stocks have felt the contagion effect that has also weighed on the broader sector and indexes heavily weighted towards the tech sector. The supplier to Apple for instance also has a supplier and in there lies the contagion.

Facebook has faced a tumultuous time of late and, while there was some heavy fallout following the Facebook – Cambridge data scandal that certainly raises many questions over the future of social media platforms as we know it today, it was Facebook’s bread and butter ad revenue and user forecasts attributed to the data scandal that did the damage.

Facebook’s slide and influence across the broader market should perhaps be of greater concern to the U.S government, regulators and governments worldwide than the cryptomarket and future of blockchain technology.

With regulators and government groups tasked with assessing the broader cryptomarket reporting it poses little to no threat to the global financial markets, FAANG members are quite the opposite, with a vast majority of household portfolios holding one, if not all 5 stocks.

No doubt there have been some solid gains enjoyed by many, but at some point, what goes up must come down and as the tides of time shift, sentiment towards a certain platform can also shift and Cambridge Analytics contributed, though whether it’s the end of Facebook remains to be soon.

At the end of the day, while Facebook saw the biggest market cap slide in market history, long-term investors wouldn’t be at fault for missing the 20% share price slide when simply viewing the stock’s 52-week range, with Facebook Inc. still up 17.4% from its 52-week low $149.02.

Whether that brings complacency near-term, investors possibly viewing the stock as being simply 20% cheaper remains to be seen, but it wasn’t long ago that Google faced the wrath of EU regulators, with a fine more akin to the size of fines that European banks coughed up to U.S regulators off the back of breaches to SEC rules and regulations.

While U.S regulators have earned their crust fining European banks by hefty sums since the Global Financial Crisis, European regulators have found a way to hit back and that’s never going to be a good thing for an already fragile sector.

Trade War – Can It Hurt Tech Stocks?

If there was a time when the markets would have preferred the U.S president to let things be, the added attention from Trump and the administration on the tech sector and China’s reported interest and access to U.S tech companies has been another issue faced by investors favouring a sector that has certainly seen a solid run over almost 2-years.

Trump’s trade war with China has left the tech sector heavily exposed and the decision by the U.S to refute China Mobile’s request for entry into the U.S, which comes in the wake of U.S hitting China’s ZTE with sanctions that almost buried one of China’s largest tech companies, has only added to the pressure faced by tech companies.

Tariffs on Chinese goods and expectations of a technology decoupling between U.S and China tech companies is a factor that will add to the pressure. Trump has cited national security as the main reason behind the shift in attitude towards China’s tech companies and to be fair, foreign ownership in anything tech related, particularly the telecoms, should be an issue for any nation and national security and even more so when considering the fact that the cost of cybercrime is estimated to hit $6bn by 2021, quite a jump from $3bn in 2016.

The U.S has plenty to be concerned when considering the fact that both China and Russia share 3rd position behind the U.S and Israel, on best offensive cyber capabilities, the irony being that it was at Russia’s hand that Trump managed to squeeze past Clinton on his way into the Oval Office. Ironically, tech stocks might be a crucial part for a solid national cyber warfare.

Will Twitter and Facebook recover?

With so much uncertainty and sky-high valuations amongst the FAANG stocks, Apple Inc. is in focus this week, with its earnings results due out after the market close on Tuesday 31st July, with Apple Inc. enjoying a consensus buy recommendation ahead of the earnings, based on revenue EPS forecasts.

Not too dissimilar to Facebook and even Twitter, which plunged 20.54% on Friday, in response to a reported slide in monthly users, with warnings of more declines to come in the coming months weighing on investor sentiment, Twitter user numbers have been key to valuing the company and not the platform itself.

Looking away from Social media and stocks that have a heavy reliance on FAANG earnings and growth potential certainly looks to be the way forward for now and, with the trade war showing few signs of coming to an end, tech stocks with a heavy reliance on China, either as a sales market or as a supplier may also need to be carefully considered with the bias towards the negative until there is some resolution to the ongoing trade war.

Social media platforms are beginning to lose popularity at the pace at which they rose in the early years and, while there may be some support from the sheer volume of users, the market’s choice of Facebook and other FAANG members as the tech sector’s barometer may well need to change sooner rather than later.

Microsoft Wants To Rival Amazon Go With Cashier-free Solution In Development

Amazon.com, Inc. (NASDAQ:AMZN) showcased its cashier-less Amazon Go store in Seattle last year, giving the world a glimpse at the potential future of the retail store. It looks like the showcase posed a challenge to rival tech firm Microsoft Corporation (NASDAQ:MSFT) because new reports suggest that the software giant is also working on a similar project.

Microsoft has reportedly poached a computer vision specialist that was involved in the development of Amazon Go. Sources claim that Microsoft is working on a project that will involve cashier-less shopping experiences. The ongoing experiment tracks items through cameras that are mounted on the shopping carts.

Unlike Amazon, Microsoft’s approach involves partnerships with retail companies to build automated checkouts that will be powered by the Microsoft Cloud services. Amazon currently dominates online retail but it has been planning on spreading its influence in the brick and mortar domain by launching its own stores. The sources which have remained anonymous told Reuters that Microsoft has been demonstrating the technology to retailers all over the world and that it has also engaged Walmart Inc (NYSE:WMT) about the possibility of working together on the project.

One of Microsoft’s main selling points with its new cashier-less retail project is that it will help retailers to keep up with Amazon Go. The latter is on track to launch in San Francisco and Chicago. It is a disruptive technology which analysts believe will soon become a trend, thus the need for retailers to be prepared.

Microsoft wants to compete indirectly with Amazon in retail

Microsoft’s involvement in such projects is advantageous for retailers. The company’s involvement in big partnerships in different industries in the past has proven to be good for business and its contribution to the retail market using an automated checkout system should be no different.

“This is the future of checking out for convenience and grocery stores,” stated Gene Munster, the executive in charge of a research at a Minneapolis firm called Loup Ventures.

Microsoft has not revealed how it plans to roll out automated checkout services to the retail market. In fact, there is no confirmation whether the company plans on making the project a reality but that is most likely going to be the case if it is working on teaming up with retail giants like Walmart.

From an operations standpoint, such a solutions would eliminate the need for cashiers, thus saving space and money that would have been used to pay cashiers. On the flip side, there are concerns about the possibility of such technology eliminating a lot of jobs, thus adding to the unemployment problem. It is also not clear whether shoppers want such technology.

Loup Ventures estimates that the automated checkout market in the U.S is worth roughly $50 billion. Meanwhile, cashier jobs are the most common jobs in the U.S. One thing that is clear is that artificial intelligence is rapidly changing the landscape for many industries and the retail sector is one of the industries that are on a collision path with API. Neither Walmart nor Microsoft has responded to requests for comments.

Microsoft Corporation (NASDAQ:MSFT) Strikes Deal To Acquire Github

Sources familiar with the matter revealed that Microsoft and GitHub have been holding acquisition talks and that the deal is courtesy of the internet giant’s CEO, Satya Nadella. GitHub executives claim that they were impressed by the support and encouragement he has offered to coders and their initiatives ever since he took over the helm at Microsoft in 2014.

Nadella has been very vocal about the positive impact that developers make on the society through coding and this is a point that he stressed in 2017 during the Build conference. Meanwhile, Microsoft’s acquisition of GitHub is a strategic move that aligns with the company’s pursuit of securing more developers. Its acquisition would allow it to access roughly 27 million developers. However, it seems some developers are not excited about the acquisition of GitHub by Microsoft.

Microsoft has not made any official announcement although sources familiar with the dealings claim that the company will most likely make the announcement this week. The financial terms have not been announced although they will most likely be publicized when the software and tech giant announces the deal.

What does the acquisition mean for developers and the rest of the world?

Nadella’s mission has been to invest more in open-source technologies. Microsoft has already put Visual Studio Code, PowerShell and the JavaScript engine of Microsoft Edge on the open-source domain. The firm has also teamed up with acquired Xamarin for mobile app development and Canonical to make Ubuntu available on Windows 10.

Microsoft has also been leveraging the open source Git version control system to facilitate further development of Windows along with the acquisition of the SQL Server to Linux. Developers have over time become more interested in the company’s Visual Studio Code. The latter allows developers to create, as well as debug cloud and web applications.

The acquisition of GitHub by Microsoft will thus allow it to go deeper as far as providing open source software. It also means the company is working on further integration between its developer tools and GitHub. Microsoft announced during the Build conference in May that it will continue working closely with GitHub so as to integrate it into the Microsoft App center for developers.

The partnership should provide more opportunities and also more resources to developers which will allow them to push their creativity and achieve more. It will also allow developers to expand their scope of influence on the society. It also means more open source software will be available in the market although these are just some of the many benefits that are expected to come from the GitHub acquisition.

Developers should expect to get a better picture of Microsoft’s plan with the acquisition of GitHub once the deal is announced. Microsoft has so far not released any comments pertaining to the matter although there is a lot of excitement pertaining to the deal.