One of the things I love most about science fiction is that it so frequently forecasts the future. Jules Verne imagined the submarine in 1870 with Twenty Thousand Leagues Under the Sea. H.G. Wells described the tank in a 1903 story for The Strand magazine. And in 1931's Brave New World, Aldous Huxley foreshadowed antidepressants.
I've not written a lick of science fiction in two decades, so I'm hardly qualified to tell you what's coming next. Fortunately, I don't have to. Venture capitalists and entrepreneurs have spent billions inventing the future, and their bets are well documented.
According to the first-quarter MoneyTree report from PriceWaterhouseCoopers, early-stage investors spent most of their capital on software ($5.58 billion), biotech ($1.73 billion), and industrial and energy businesses ($1.36 billion).
Meet the infrastructure for the connected future
The disparity between software and everything else is telling. At the very least, it suggests that VCs believe that we're headed for a connected, app-driven future.
How can we cash in alongside them? By betting on the stocks responsible for the infrastructure of tomorrow. Here are my three favorites.
- Tesla Motors (NASDAQ:TSLA). Wait... isn't Tesla a car company? Not the way I see it. Rather, CEO and co-founder Elon Musk is building a 21st century integrated transportation business that's reinventing how we get and keep power as a byproduct of what it does. In particular, the Powerwall home battery looks to capture and keep solar energy in order to move homes off the grid faster. Miniaturizing that same technology could profoundly impact future laptop, tablet, and smartphone designs, among other things, because long-lived batteries are key to providing continuous connectivity.
- Facebook (NASDAQ:FB). The world's largest social network is also the world's largest connected community. What's more, Facebook CEO Mark Zuckerberg is helping to fund global wireless access via Internet.org. In both cases, Facebook is slowly transitioning from "interesting tool" to "daily habit," epsecially when you factor in the 1.25 billion users who access the platform via a mobile device each month. Most signs point to Facebook serving as the connective tissue of the networked future.
- American Tower (NYSE:AMT). Not that long ago, the United Nations estimated that more than 4 billion people remained disconnected from the Internet. Serving them with new ditches filled with fiber optic cabling isn't likely when you consider the expense of doing so. Wireless is a better alternative, and no company is better positioned to deliver signal to emerging areas than American Tower. From 47,000 communications sites three years ago to 87,000 as of this writing, the company is in the process of blanketing the globe with pervasive connectivity.
Science fiction or science fact?
To me, all three of these stocks look well positioned for the future -- especially given the money that venture capitalists are spending to fund businesses that depend on connectivity. Yet no educated guess is ever perfect, and I've been wrong plenty of times in my investing choices.
What companies do you see inventing the future? Start the discussion by leaving a comment below.