Friday, October 21, 2022
There’s a new trend out there gathering steam.
During the past 18 months or so, millions of Americans have left the workforce. That’s why companies from across the economy are being forced to do more with fewer workers.
A report from the Brookings Institution says about four million workers are sidelined with Covid-related issues. And economists believe the number of people not interested in full-time work is several times that figure.
Many are calling this The Great Resignation. But maybe we ought to start calling it as something else: The Rise of the Voice Bots!
You see, since companies are unable to hire workers, they’re turning to technology. Specifically, they’re turning to voice-bot systems. Mordor Intelligence reports that, in just four years, such systems will be a key part of a $27 billion sector.
Voice bots are already gaining enormous steam in the hospitality industry, where 65% of restaurants say they’re chronically short-staffed.
Restaurant managers are doing what corporate executives have been doing for years: getting their phones answered by automated software — in other words, voice bots.
And now I’ve uncovered a great play in this sector. In the recent past, it pushed voice-bot technology forward by partnering with Apple Inc. (AAPL) to develop its Siri voice assistant…
But now this company is ready to soar — and as investors, it’s time to get on board…
To say I’m an early adopter of voice technology is an understatement.
I began using Siri the day the bot was released on Oct. 4, 2011. Now I rely on it daily for everything from calendar items and making calls, to sending text messages and setting reminders for myself.
I even use it on my watch… while I’m in the shower.
It’s all part the Automated World we’ve been talking about at Trend Trader Daily. From factories and self-driving cars to software that writes itself, much of daily life is happening in the background, automatically.
This is why I believe restaurants using automated voice technology are onto something big.
Consider California-based BJ’s Restaurants, Inc. which began testing a voice-bot system in August.
Its system lets customers know how long the wait for a table will be at their local restaurant. It even lets them put their names on a waiting list without having to speak to anyone, a godsend these days with so many eateries being jam-packed and understaffed.
McDonalds has already given this technology a whirl. Company officials say national adoption is just years away. But a field-test last year was encouraging. The firm tested voice-bot technology at 10 restaurants and found the bots were 85% accurate at taking orders.
As an early adopter of this technology, I’ve been following the fortunes of a company called Nuance Communications for years now.
The firm had a huge lead on the rest of the field. It pioneered AI-powered voice systems and is used by a “Who’s Who” of companies across sectors.
It’s particularly strong in healthcare. Some 77% of American hospitals rely on it. Essentially, it allows doctors to keep their patients’ medical records up-to-date by speaking as they work — for example, by describing their findings as they review radiology imaging.
But as much as I love Nuance and its technology, there’s no way to make a direct investment in it. That’s because the firm has already been acquired by one of the world’s great tech firms…
You see, Microsoft Inc. (MSFT) used to offer its own voice bot, known as Cortana. But the system was lousy, so it never gained much traction.
That’s why Microsoft swooped in and bought Nuance last year in a $16.9 billion deal.
Friends, I recommend investing in Microsoft.
As the Nuance acquisition makes clear, “Mr. Softee” (as Microsoft is known to stock traders because of its “MSFT” ticker) is adept at using buyouts to enter new markets and claim growth.
I believe Nuance was a great buy. This deal delivers organic growth and bolt-on growth.
For example, Microsoft’s Azure cloud-computing service already has specialized platforms for healthcare. And yet, with the purchase of Nuance, Microsoft gets a much stronger foothold in the $1.2 trillion healthcare market.
Having Nuance in the stable now gives Microsoft a chance to entice hospitals, clinics, and other healthcare companies to move their critical data and business apps to the Azure cloud.
In addition, Microsoft is likely strategizing about using Nuance’s tech to help other industries use voice-tech to automate their record-keeping, too.
And don’t forget that Microsoft is a major player in another cutting-edge field: augmented reality, especially for the U.S. military.
Last year, the Pentagon awarded Microsoft a contract worth nearly $22 billion. The idea is to produce 120,000 AR headsets for U.S. Army soldiers.
So now Microsoft’s HoloLens devices, which were originally designed for gaming), are finding use-cases in the enterprise.
The headsets combine virtual images with real-world views. For the Army, they provide a real-time heads-up display that uses artificial intelligence to give solders tips related to suggested targets.
Its voice-based AI and VR technology show how Microsoft is now one of the top tech firms operating in the world today.
And you can see evidence of this in its bottom line…
Over the last three years, MSFT has grown its per-share profits by 27%. At that rate, we’d expect shares to double in about 2.5 years.
The stock has come under pressure lately along with the broader market.
But for long-term investors, this can be a blessing. Buying great companies at reduced prices can reap huge rewards.
I suggest entering now and adding more along the way, paying particular attention to buying on the dips.
And if you’re keeping your powder dry at the moment, you should put this tech leader on your watchlist.
Cheers and Good Investing
Cheers and Good Investing,
Chief Investment Officer
Trend Trader Daily