The next big thing is coming -- and I'm not talking about Samsung's advertising campaign.
New technologies are emerging, radical new concepts and platforms that could change the face of business and society. Thanks to advances such as wearables, the Internet of Things, drones, and autonomous vehicles, among many others, the world is certain to look quite different in another decade or two.
For investors, these changes present some challenges, but also offer tremendous opportunities. Below are three stocks that could provide upside for those seeking to take advantage of the next big thing.
Universal Display as a bet on wearables and next-gen TVs
As its ticker symbol implies, Universal Display's (NASDAQ:OLED) success is heavily tied to the adoption of organic light-emitting diode, or OLED, display technology. Universal Display holds thousands of patents in the space, which it licenses out to a number of major consumer electronics manufacturers, including both LG and Samsung. The company also supplies materials for OLED production.
OLED is already massively popular -- if you have a Samsung Galaxy handset or tablet, it's almost guaranteed to have an OLED display -- but OLED's long-term success could dwarf its current status.
When it comes to display technology, OLED competes with liquid-crystal display. LCD has a number of advantages, which is why certain handset manufacturers (most notably Apple) continue to use it, but OLED has one major advantage: it's more easily flexed. This flexibility allows it to be curved or bent (consider the Galaxy S6 edge), making it a more ideal fit for wearable gadgets.
Most smartwatches available for purchase today use OLED screens, and Apple Watch is expected to be no different. Smartwatches (and wearables in general) remain a nascent market, but if they catch on, the business could prove to be a massive win for OLED technology, and for Universal Display shareholders.
OLED could also take over the television market. Current OLED TVs are expensive and suffer from image retention and other issues, but they offer unparalleled picture quality. LCD TVs have been around for well over a decade and still collect the the overwhelming majority of sales, but OLED TVs could eventually emerge as a more popular alternative.
Sierra Wireless as a play on the Internet of Things
The Internet of Things -- the idea that almost all objects will eventually become smart and connected to a network -- appears destined to become reality. Research firm Gartner expects that by 2020, 25 billion "things" will be connected, up from about 4.9 billion this year.
Several companies stand to gain from the growing Internet of Things, but Sierra Wireless (NASDAQ:SWIR) is one of the more interesting. Its principal business is the creation of embedded wireless modules. These modules enable objects (cars, laptops, parts of electrical grids) to connect to a wireless network. As the Internet of Things trend ramps up, demand for Sierra Wireless' products could increase.
Sierra Wireless has posted impressive revenue growth in recent quarters, and though it hasn't been consistently profitable on a generally accepted accounting principles basis, it has exceeded analysts' expectations.
NVIDIA for autonomous vehicles and drones
NVIDIA's (NASDAQ:NVDA) primary business centers on the market for its graphics cards. Avid gamers and professionals rely on its chips to output high-fidelity graphics to their PC displays.
But NVIDIA's future could be quite different.
In addition to desktop graphics, the company competes in the mobile chip space. Its Tegra processors have powered a variety of smartphones and tablets in recent years, but NVIDIA hasn't been particularly competitive in the business. Most handset and tablet manufacturers have spurned NVIDIA's mobile chips in favor of rival Qualcomm's.
But NVIDIA remains committed to Tegra. Though it probably won't power your next handset or tablet, there's a chance it could power your car or even your drone.
NVIDIA has partnered with automotive manufacturers, most notably Audi, to use Tegra for a variety of advanced vehicle functions. Earlier this year, at the Consumer Electronics Show, Audi announced that it would use NVIDIA's latest chip, the Tegra X1, for its push into autonomous vehicles. Also at CES, NVIDIA highlighted a drone concept that relied on its Tegra processor. The drone market remains in its early days, but NVIDIA's chips could eventually underpin a variety of next-generation unmanned aerial vehicles.