“Disruptive innovation” can conjure up images of flying cars, lightsabers, or a brave new world. But these technologies may not be as far off as they seem.
Tech companies are using disruptive technologies like artificial intelligence to analyze large, complex datasets. Research and development in the healthcare industry has created lifesaving drug therapies and treatments. And climate change is forcing energy and utilities companies to focus on renewable energy.
Investing in such disruptive innovation can be tricky, says Dave Sekera, Morningstar’s chief US market strategist.
“Because disruptive technology is such a broad, wide-reaching concept, it is difficult to identify companies that fall within the group,” he says.
The Morningstar Exponential Technologies Index holds about 200 stocks that Morningstar analysts expect to experience significant economic benefits from using or producing a new technology. The companies covered in this index touch on any combination of nine themes: Big Data and analytics, cloud computing, energy transition, financial technology innovation, healthcare innovation, hyperconnectivity, nanotechnology, next-generation transportation, and robotics. (Explore more about each theme in the index’s rule book.)
But which of these companies, representing these nine emerging themes, have the competitive advantages and management teams to thrive?