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The Next Big Theme: December 2024

Dec 17, 2024

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U.S. Infrastructure

Infrastructure Investment and Jobs Act Funds Flow to More Projects

On November 15, the third anniversary of the signing of the Infrastructure Investment and Jobs Act, the U.S. Department of Transportation (DOT) announced over $3.4 billion in grants to improve passenger rail, port, and road infrastructure, and supply chains. Among the grants, 19 projects along the Northeast Rail Corridor, the busiest rail passage in North America, will receive up to $1.4 billion in funding to increase speed, accessibility, and reliability. Additionally, 15 port-related projects are slated to receive $580 billion in grants to strengthen supply chains and improve port and freight efficiency in 15 states. Of the remaining funds, $1.2 billion is slated for domestic manufacturing of sustainable transportation materials across 39 state DOTs to accelerate the use of cleaner materials that are critical to building safe and sustainable infrastructure for the future. Another $172 million will go towards projects to improve roadway safety.1

Artificial Intelligence

Business Spending and Investments in Enterprise AI Continue to Surge

A survey of 600 enterprise IT leaders from companies with 50 or more employees revealed that business spending on generative AI surged 500% this year, rising from $2.3 billion in 2023 to $13.8 billion.2 Code generation emerged as the top enterprise use case, cited by over 50% of survey respondents. Other prominent use cases were support chatbots and enterprise search and retrieval. The foundation models enabling these use cases, such as OpenAI’s ChatGPT, Google’s Gemini, and Anthropic’s Claude, received the bulk of the enterprise spend, leading tech giants to significantly increase their investments in large language models.3 In late November, Amazon announced that it would invest an additional $4 billion in Anthropic, bringing the company’s total investment in the startup to $8 billion.4 That investment came shortly after Anthropic debuted AI agents that can handle complex tasks on a user’s behalf. AI agents are another leading AI investment trend in 2024, with companies like Google, Microsoft, and OpenAI pursuing the technology.5

Lithium & Battery Technology

Major Mergers and U.S. Expansion Help Lithium Industry Accelerate

Australia-based Sayona Mining and U.S.-based Piedmont Lithium announced a 50%-50% merger to create a consolidated entity expected to be valued at $623 million.6 The merger could create a leader in the global lithium supply chain amid the current low spodumene price environment. The new company could become the second-largest lithium miner in North America by 2030, given the scale of the two companies’ operations throughout Canada and the United States.7 Another Australian miner, Ioneer, recently received final approval for the Rhyolite Ridge Lithium-Boron mine in Southern Nevada, the first U.S. lithium project approved by the Biden administration as part of its efforts to accelerate domestic mineral production. Expected to operate for 23 years, the mine may provide enough lithium for more than 370,000 American-made electric vehicles annually and process other crucial battery materials.8

Defense Technology

Investments Show No Signs of Slowing Down

Defense contractor AeroVironment, renowned for its uncrewed aircraft systems (UAS) and loitering munitions, announced plans to acquire BlueHalo, a company specializing in drone swarm and counter-drone technologies.9 With this $4.1 billion deal, AeroVironment aims to establish a next-generation defense technology entity operating across multiple domains, including air, land, sea, space, and cyber. BlueHalo’s extensive portfolio and over 100 patents in areas such as space technologies, counter-uncrewed aircraft systems (cUAS), electronic and cyber warfare, AI, and uncrewed underwater vehicles, are expected to complement and enhance AeroVironment’s existing capabilities. The agreement received approval from both companies’ boards and the deal is expected to be finalized in the first half of 2025.10 The deal aligns with a trend of increased funding in the defense tech sector. Through mid-November 2024, defense technology startups collectively raised nearly $3 billion, surpassing the previous record of $2.6 billion in 2022.11 Companies like Anduril Industries, a weapons manufacturer, and Saronic Technologies, an autonomous maritime vehicle company, have attracted substantial investments, reflecting a growing interest in a diverse set of innovative defense solutions.12

Healthcare Innovation

Obesity Drugs Proving Beneficial Beyond Weight Loss

In a late-stage trial, Novo Nordisk reported positive data in a common form of obesity-associated liver disease. Thirty-seven percent of patients in the study taking semaglutide, which has the same active ingredient as Ozempic and Wegovy, showed improvement in liver fibrosis without their illness worsening, compared to just 22% of placebo patients. Further, 62.9% of patients on semaglutide had their steatohepatitis resolved with no worsening of liver fibrosis, versus 34.1% of patients in the study’s control cohort.13 Novo expects to submit semaglutide for expanded approval in this indication early next year. Approval could strengthen the case for insurers that obesity drugs offer benefits beyond weight loss, potentially expanding the pool of patients eligible for these treatments. Novo’s Wegovy, for instance, is already approved for reducing heart risk in individuals who are overweight or obese.14

Autonomous & Electric Vehicles

Electric Vehicle Adoption Strengthens in China

In October, China recorded its third-straight month with greater than 1 million electric vehicles (EVs) sold. The number of new energy vehicles (NEVs, or plug-in hybrids and battery electric vehicles) reached a record-high 1.196 million units, a 56.7% year-over-year increase.15 The strong growth was once again attributed to China’s vehicle trade-in incentive scheme, which was first announced in April 2024 and strengthened in July 2024. China’s EV sales growth rates remain much higher than those in the United States and Europe.16 A potential positive development in the U.S. autonomous vehicle space is that the incoming Trump administration intends to loosen federal regulations to make it easier to get fully autonomous vehicles on the road. New rules could reduce existing roadblocks, such as raising the cap on how many self-driving cars can be on public roads. Currently, the National Highway Traffic Safety Administration permits each manufacturer to deploy up to 2,500 autonomous vehicles per year.17

THE NUMBERS

The following charts examine returns and sales growth expectations by theme, based on their corresponding ETFs or indices.

KEEP UP WITH THE LATEST RESEARCH FROM GLOBAL X

To learn more about the disruptive themes changing our world, read the latest research from Global X, including:

ETF HOLDINGS AND PERFORMANCE

To see individual ETF holdings and current performance across the Global X Thematic Suite, including information on the indexes shown, click these links:

Appendix: Thematic Expected Sales Growth Graph Indices

AgTech & Food Innovation: Solactive AgTech & Food Innovation Index

Aging Population: Indxx Aging Population Thematic Index

Artificial Intelligence & Technology: Indxx Artificial Intelligence & Big Data Index

Autonomous & Electric Vehicles: Solactive Autonomous & Electric Vehicles Index

Blockchain: Solactive Blockchain Index

Clean Water: Solactive Global Clean Water Industry Index

CleanTech: Indxx Global CleanTech Index

Cloud Computing: Indxx Global Cloud Computing Index

Cybersecurity: Indxx Cybersecurity Index

Data Center & Digital Infrastructure: Solactive Data Center REITs & Digital Infrastructure Index

Defense Tech: Global X Defense Tech Index

E-Commerce: Solactive E-commerce Index

FinTech: Indxx Global FinTech Thematic Index

Genomics: Solactive Genomics Index

Hydrogen: Solactive Global Hydrogen Index

Infrastructure Development ex-U.S.: Global X Infrastructure Development Ex-U.S. Index

Internet Of Things: Indxx Global Internet of Things Thematic Index

Lithium & Battery Technology: Solactive Global Lithium Index

Millennial Consumer: Indxx Millennials Thematic Index

PropTech: Global X PropTech Index

Renewable Energy Producers: Indxx Renewable Energy Producers Index

Robotics & Artificial Intelligence: Indxx Global Robotics & Artificial Intelligence Thematic Index

Social Media: Solactive Social Media Total Return Index

Solar: Solactive Solar Index

Telemedicine & Digital Health: Solactive Telemedicine & Digital Health Index

U.S. Infrastructure: Indxx U.S. Infrastructure Development Index

Video Games & Esports: Solactive Video Games & Esports Index

Wind Energy: Solactive Wind Energy Index

 

Category: Articles

Topics: Thematic

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This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. This information is not intended to be individual or personalized investment advice and should not be used for trading purposes. Please consult a financial advisor for more information regarding your investment and/or tax situation.

Investing involves risk, including the possible loss of principal. International investments may involve risk of capital loss from unfavorable fluctuation in currency values, from differences in generally accepted accounting principles or from economic or political instability in other nations. Narrowly focused investments may be subject to higher volatility. There are additional risks associated with investing in lithium and the lithium mining industry. Certain of the funds are non-diversified; please see the prospectuses for more information.

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Investments in infrastructure-related companies have greater exposure to the potential adverse economic, regulatory, political and other changes affecting such entities. Investments in infrastructure-related companies are subject to various risks including governmental regulations, high interest costs associated with capital construction programs, costs associated with compliance and changes in environmental regulation, economic slowdown and excess capacity, competition from other providers of services and other factors.

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Shares of ETFs are bought and sold at market price (not NAV) and are not individually redeemed from the Fund. Brokerage commissions will reduce returns. Beginning October 15, 2020, market price returns are based on the official closing price of an ETF share or, if the official closing price isn’t available, the midpoint between the national best bid and national best offer (“NBBO”) as of the time the ETF calculates current NAV per share. Prior to October 15, 2020, market price returns were based on the midpoint between the Bid and Ask price. NAVs are calculated using prices as of 4:00 PM Eastern Time. The returns shown do not represent the returns you would receive if you traded shares at other times.

Indices are unmanaged and do not include the effect of fees, expenses or sales charges. One cannot invest directly in an index.