The annual Consumer Electronic Show (CES) begins today in Las Vegas and will run through Jan 8. The show will celebrate its 50th anniversary and is anticipated to keep attendees and tech enthusiasts mesmerized with new gadgets, devices and innovative concepts.
Despite the absence of some big names like Apple and Tesla, this year’s show has gained significance due to its gargantuan size. Per The Street, at least 175K people attended the show last year and the figure is expected to cross 200K in 2017. This is huge, keeping in mind that the show is not open to the general public.
Moreover, exhibitions of the latest gadgets and devices will be done over a massive 2.5 million square feet of space.
2017 CES: Key Themes
Being a manufacturer’s show, CES is renowned for demonstrating latest televisions (be it 4K or HDR) as well as usual consumer-home goods like fridges, washing machines, and dishwashers. Smartphones and related accessories like wireless audio, especially after Apple ditched the headphone jack, will also remain under focus.
Samsung is expected to unveil its “Ultra-High Quality Sound,” a technology designed to upscale audio. Per the Korean company, the technology is capable of converting audio signals that are between 8 bits and 24 bits into 32-bit signals. Further, the company is expected to unveil its H7 wireless speakers.
However, we believe the key themes of the show will revolve around autonomous car technology, virtual and augmented reality, artificial intelligence (AI) and Internet of Things (IoT).
Autonomous Car: The self-driving car technology is currently most-sought after aspect among automotive manufacturers. The race for developing the first marketable autonomous car is currently being run by all major automotive companies including Tesla, Ford, BMW, Audi, General Motors, Honda, Hyundai, Nissan and others.
Per IHS, global sales of autonomous vehicles will reach nearly 600K units in 2025, which will further accelerate to 21 million cars on world’s roads by 2035. The forecast reflects 43% CAGR between 2025 and 2035, which validates the growing craze around the technology.
At CES 2017, Ford is anticipated to unveil concept behind its next Fusion Hybrid self-driving car. However, we are excited about Japanese automaker Honda Motor HMC, which is expected to show off its NeuV concept vehicle at 2017 CES. We believe Honda’s collaboration with chipmaker NVIDIA NVDA makes it a formidable force in the self-driving car space. Honda currently carries a Zacks Rank #3 (Hold).
Honda recently entered into discussions with Waymo – an independent company of Alphabet GOOGL, another Zacks Rank #3 stock. The companies will be discussing the procedure to incorporate Waymo’s self-driving technology into Honda vehicles.
Virtual and Augmented Reality: Virtual Reality (VR) and Augmented Reality (VR) gadgets are expected to attract a whole lot of attraction this year as the technologies enter the mainstream. IDC expects the AR and VR headset shipments to grow at a CAGR of 108.3% from 2015 to 2020, reaching 76 million units.
We expect CES 2017 to witness innovative hardware from new entrants in the field. As noted by MarketWatch, “CES 2017 will have the largest showcase of virtual-reality technology ever, represented by more than 70 companies, a 48% increase from last year.” The augmented-reality (AR) section will almost double to a footprint of 8,500 square feet from 4,500 in 2015.
Despite several new entrants, we believe Google will be the most watched stock in the segment due to Tango AR tool, which it developed in collaboration with Lenovo. Google AR tool has been embraced by BMW at CES 2017, when the automaker announced that it will use the tool to provide an interactive tour of its BMW i8 or BMW i3 cars to prospective customers.
Artificial Intelligence (AI): AI market is anticipated to be worth $5.05 billion by 2020 as per MarketsAndMarkets.com. AI techniques like machine learning, deep learning and natural language processing (NLP) have gained immense traction over the last couple of years due to massive demand for analysing unstructured data like tweets, social media posts, photos and videos.
AI techniques have been used by companies like Alphabet, Facebook, IBM and Microsoft to develop computer systems that can translate text into different languages and recognize objects in pictures. Adoption of AI-based chatbots for routine customer interaction and advertising increased a lot in 2016. We expect to see a lot more innovation around AI techniques at CES 2017.
NVIDIA, known for its powerful Graphic Processor Units (GPUs) and “parallel processing” is a must-watch stock in this segment. During keynote at CES 2017, the company announced a number of new products including a remote AI microphone that let users control the Google Assistant in Nvidia Shield Android TV from anywhere in house. The stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
IoT: IoT embraces everything, be it drones, connected TVs, fridges, homes, smart cities, vehicles and wearables. The growing adoption of cloud computing has been the key catalyst behind connectivity and interaction among devices. Moreover, the continued reduction in the cost of manufacturing semiconductors that makes it feasible to install them on a range of everyday devices that were previously unconnected is a major growth factor.
Per Mckinsay estimates, IoT supported device sales will grow at a CAGR of 15–20% annually over the next few years to 26–30 billion units by 2020.
Intel’s INTC announcement of a new 5G wireless modem that works at both superhigh radio frequencies and lower-band airwaves at current year CES improves its IoT offering potential. The company plans to start shipping its first 5G modem for testing in the second half of 2017.
Intel has been focusing on solidifying IoT footprint to offset sluggish growth from PC business. The company reportedly has partnered Amazon Web Services to develop smart home solutions. The company currently carries a Zacks Rank #3.
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