Frontier Tech Tracker: Q1 2019

Frontier Tech Tracker: Q1 2019

This piece marks the first in a quarterly series to track the progress of frontier tech, as measured by the Loup Frontier Tech Index. The index tracks the performance of publicly-traded companies that influence the future of technology including AI, robotics, autonomous vehicles, computer perception, and virtual and augmented reality.

Just as the Consumer Price Index (CPI) measures inflation and the Dow tracks the broader stock market, we believe the Loup Frontier Tech Index provides a benchmark for the emergence of frontier technologies.

In the first quarter of 2019, the Loup Frontier Tech Index was up 18.9%, compared to the NASDAQ up 15.9% and the S&P up 12.9%. Notable movers within the index included:

  • Universal Display – OLED (+67.7% in Q1): OLED reported strong Q4’18 results (including a one-time tax benefit), despite a 4.9% decline in smartphone shipments worldwide in the quarter. The company is benefiting from stability in Samsung’s business (OLED’s largest customer) and LG’s increasing emphasis on the OLED TV business.
  • iRobot – IRBT (+48.5%): In late Jan., iRobot announced a meaningful extension to its product line of robotic home appliances: an autonomous lawn mower. Unlike existing robotic lawn mowers, Terra uses mapping and navigation technologies that do not require boundary wires. iRobot also issued strong Q4’18 results in early Feb., which sent the stock up nearly 10% on the next trading day (Feb. 7th).
  • AMD – AMD (+35.5%): AMD continues to benefit from increasing demand for graphics processing units (GPUs), particularly their use in datacenters and gaming PCs. The company reported Q4 results essentially in-line with Street expectations and guided Q1 revenue 15% below the Street, but investors appear to be more excited about AMD’s secular, long-term tailwinds. In our view, PC gaming (e.g., Fortnite) and cloud gaming (e.g., Google Stadia) are undeniable themes, and AMD is well positioned to benefit.
  • Intuitive Surgical – ISRG (+22.4%): Intuitive Surgical is widely viewed as the leader in the robotic surgery space. In 2018, placement of the company’s flagship Xi system (which is five years old) accelerated to 35% y/y, the platform’s fastest growth rate since 2015. And utilization of these systems is also increasing, with growth in procedures at 32% in each of the last two years. In Feb., Intuitive announced that it had received FDA clearance for part of its new Ion system, which represents an entirely new product cycle, addressing new surgery types. 
  • Tesla – TSLA (-9.8%): Our long-term confidence in the Tesla story is unchanged. However, as we explained in mid-March, we expect the company to navigate a bumpy road over the next year. Concerns about Q1 Model 3 deliveries weighed on shares throughout the quarter, which turned out to be accurate. In Q1, Tesla delivered 63k total vehicles vs Street expectations of 75k. Read more about our take on Tesla’s disappointing Q1 here.

Disclaimer: We actively write about the themes in which we invest or may invest: virtual reality, augmented reality, artificial intelligence, and robotics. From time to time, we may write about companies that are in our portfolio. As managers of the portfolio, we may earn carried interest, management fees or other compensation from such portfolio. Content on this site including opinions on specific themes in technology, market estimates, and estimates and commentary regarding publicly traded or private companies is not intended for use in making any investment decisions and provided solely for informational purposes. We hold no obligation to update any of our projections and the content on this site should not be relied upon. We express no warranties about any estimates or opinions we make.

Artificial Intelligence, Augmented Reality, Autonomous Vehicles, iRobot, Robotics, Tesla