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Jonathan Mzengeza. I’m the portfolio manager for technology here at CIBC Asset Management.
The top tech themes we’re looking to invest in right now, within AI in particular, we’re focused on natural language processing. We think, in 2020, there’s going to be a big jump in the usage of natural language processing in terms of analyzing natural language documents and speaking in voice to make it easier for them to analyze all their documents and to gain more insight from their information.
Within 5G, the main thing is that we think that in 2020, the 5G phones will be the biggest seller. It’s going to be the start of the 5G, specifically, phone cycle with Apple likely to produce some 5G phones in the second half of 2020. In addition, 5G allows for, I think, use cases within communications in terms of entertainment and social media. We’re looking at several things that would be impacted positively by 5G, such as the ability for people to be more connected between themselves as well as the fact that they’ll be able to implement things such as self-driving vehicles using 5G communications.
Then, within payments we’re still at the early stages of e-commerce penetration. When we look at e-commerce globally, e-commerce penetration running is from 8% in North America to close to 15% to 20% in Europe. When we look at the driving force of e-commerce and in particular the payments of that, more people are buying things online. That means digital payments is going as a percentage of the total payment space, and we see companies such as Shopify, with their payments infrastructure on supplying for websites, as a beneficiary of that. We also think that over time, there’s going to be the rise of digital wallets, in terms of allowing people to transfer money more easily between themselves. We see things like Square Payments and Venmo as beneficiaries—that would be Square and PayPal being the beneficiaries of that.
Within AI, I would point to companies like Nvidia that supplies the processing chips for processing data. The other company I’d point to is a company called Xilinx. Xilinx also provides processing chips. The other thing that I’d point to is the fact that with all this data, whether it is in natural language processing or image recognition, it has to be stored somewhere, and that requires both fast storage and long-term storage. We see the beneficiary of that being a company called Micron, but we’re not really invested in Micron, per se. Because storage is a very commodity space, we’d rather invest in companies that provide the infrastructure for Micron to create their chips, and therefore we look at a company called Lam. Lam Research and Applied Materials is a company that would be exposed to that.