Tuesday, January 30, 2024
During a recent event in Las Vegas, nine teams from six countries held a thrilling race involving fully autonomous cars. These vehicles reached top speeds of 180 miles per hour, with no human intervention whatsoever.
Events like these are happening all over the world. This April, for example, Abu Dhabi will host the Autonomous Racing League, a competition with a collective prize pool worth $2.5 million.
This is exciting stuff. And granted, when most people imagine a fully automated world, they typically conjure up images of events like these featuring automatic cars or robots.
But as I'll explain today, there's another element to the rise of automation that's often overlooked, which is a shame...
Because it's there that potential profit opportunities are hiding.
The element I'm referring to involves software — more specifically, software databases.
Today, nearly every medium and large company worldwide relies on some type of database for keeping and managing swaths of critical information. It's no wonder then that the global database market is valued at $65 billion and is on pace to reach $130 billion by the end of the decade.
Within this field, self-running databases are growing particularly fast, 25% per year in fact. And it's not hard to see why.
Self-running databases can secure, manage, and even repair themselves. And that's just the tip of the iceberg with respect to their capabilities.
We'll take a closer look at these capabilities in a moment. But first, let's step back and examine automation's impact on both the hardware and software side of things...
Amazon (AMZN), for example, has invested billions into automation to keep logistics costs under control. In 2022, it unveiled its first fully automated robot, "Proteus," which can navigate company warehouses completely independent of humans.
Meanwhile, the U.S. Navy is going fully automatic, too. Last year, it acknowledged delivery of a prototype ship that can function autonomously for up to a month.
Coming in at 337 feet in length, the USNS Apalachicola ranks as the Navy's largest self-running vessel to-date. It's part of the military's push to use more autonomous drones and ships in a way that could transform warfare.
You'll notice that both examples I just mentioned relate to autonomous hardware, not software. But make no mistake: there's plenty of automation impacting the software sector, too.
In fact, without complex software, none of this automation would be possible in the first place.
Consider your smartphone. If it had the same chips, sensors, and screens, but lacked any software, it'd be the most expensive paper weight you could find. Self-driving cars, meanwhile, rely on as many as 200 million lines of software code to function.
That's where self-running databases enter the picture. Unlike other databases, which act like "dumb" warehouses that simply store information, self-running ones are all but fully automated.
To users, they offer a simple, drag-and-drop interface that make them usable by everyone, not just data analysts.
And on the backend, self-running systems are constantly optimizing, handling backups and security on their own, and healing themselves in the event of damage.
Perhaps most importantly, these databases scale automatically as a company's data needs grow and use machine learning to scour all the data a company puts in for connections.
This ability can enable companies to improve their business decisions even without knowing what to look for.
The importance of databases can't really be overstated. Just about every company uses one to store customer information, sales/refund data, performance metrics, and so much more.
Earlier, I mentioned that the global market for databases is already valued at $65 billion. That's impressive taken at face value. But consider this...
Automated databases only began to emerge about five years ago. This became possible thanks to improvements in chip and data center speeds, as well as the rise of machine learning in the late 2010s.
Now this field is rapidly gaining ground because it takes away the need for highly-trained specialists to manage, manipulate, and deal with complex information. If you can drag a photo out of your online library and drop it into the body of an e-mail or text message, you can pretty much become a database wizard on self-running systems.
At the moment, the database market is overseen by a handful of software giants, along with several privately-held companies.
But small-cap companies are emerging here, too. And they're bound to eventually offer the kind of robust gains that can often outpace the tech titans.
For now, though, we should focus on the big boys, including Oracle (NYSE: ORCL), a Silicon Valley software firm that’s spearheading this field’s growth.
Over the last six years, this company’s stock has doubled. And there is plenty of room left to run.
Cheers and Good Investing,
Chief Investment Officer
Trend Trader Daily