Anthony Ginsberg, managing director of GinsGlobal Index Funds, believes that markets are set for a positive 12–18 months. He shares the implications of this for three key themes: online gaming, AI and genomics. All three benefit from prevailing conditions and could see significant growth over the coming years.
Anthony Ginsberg, managing director of GinsGlobal Index Funds, an asset management company that offers index-linked products to a wide range of investors, joins Opto Sessions this week, speaking in detail about the HAN-GINS Tech Megatrend ETF [ITEK.L].
Ginsberg is optimistic about markets in general for several reasons.
Chief among these are the macro dynamics of the coming 12–18 months. Markets tend to rally during a US election year. This is partly because the Fed tends to loosen monetary policy ahead of elections, which is “very conducive for tech stocks and growth stocks”. A weaker US dollar will also boost the dollar performance of stocks that do business internationally.
When it comes to which stocks are well-placed to benefit from this, Ginsberg thinks three are particularly promising: online gaming, artificial intelligence (AI) and genomics.
With regard to online gaming, one major tailwind is the rise of smartphone gaming.
“Smartphones are fast approaching a 50% share of all gaming usage”, says Ginsberg, with some studies already putting mobile’s share of the digital gaming industry as high as 77.7%. Increased purchasing power in the developing world — where consoles are prohibitively expensive for a majority, but smartphone use is widespread — is a tailwind for online gaming.
The potential of this market is, according to Ginsberg, one of the main factors underlying Microsoft’s [MSFT] pursuit of a takeover of Activision [ATVI].
Online gaming forms part of Ginsberg’s digital entertainment sub-theme, which also includes streaming platforms such as Netflix [NFLX]. According to Ginsberg, people in the US are streaming 25% more year-over-year while watching 10% less television.
And when it comes to movies, “online gaming today is four times the size of Hollywood”. Ginsberg predicts that the gaming industry will grow to be five times its current size, although he doesn’t specify a timeframe over which this will happen.
“Online gaming today is four times the size of Hollywood.”
Having dominated media and market attention since OpenAI released ChatGPT in November, AI is, unsurprisingly, another segment that Ginsberg feels bullish about.
Nvidia [NVDA] has been able to segue dramatically into the AI space, especially via its data centre business — a view Ginsberg shares with the many investors who briefly pushed the chipmaker’s market value past $1trn this week.
“It’s all to do with using more advanced chips to allow AI to be integrated inside cloud computing and cloud technology,” he says. “They’re one of the key proxies for AI, primarily on the hardware side.”
However, the AI opportunity is much more than a hardware play. As well as cloud providers, Ginsberg points out that robotics firms, electric vehicle manufacturers, and cybersecurity and social media companies are all finding ways to leverage AI.
“We see it as a very, very large change”, says Ginsberg, one which he believes will affect business productivity above all else. “Utilisation inside the office will probably be the biggest use of Bard or ChatGPT.”
Automation as a whole will, he believes, allow “more manufacturing to come onshore at a cheaper rate”, a benefit that could safeguard companies against geopolitical tensions with China. Thus businesses that engage with AI and automation could not only save costs, but also reap the benefit of steering their supply chains away from problematic locations.
“Utilisation inside the office will probably be the biggest use of Bard or ChatGPT.”
Ginsberg’s final trend to watch is the rise of gene sequencing technology and its increasingly widespread applications. While the theme rose to prominence during the Covid-19 pandemic, it extends far beyond vaccines.
“Cancers and other large, well-known diseases” will be the target of new treatments that result from the rise of gene sequencing, according to Ginsberg.
Additionally, genomic technology will enable pharmaceutical companies to bring drugs to market more quickly. “The whole R&D process used to take a decade, or sometimes longer,” Ginsberg says. “Today it has been fast-tracked.”
“There will probably be more M&A activity across big pharmaceuticals getting into genomics,” he predicts.
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