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The Next Big Theme: November 2024

Nov 18, 2024

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Artificial Intelligence

Custom AI Chip Production Continues to Gather Momentum

OpenAI is collaborating with Broadcom and Taiwan Semiconductor (TSMC) to develop its first ever proprietary chip, aiming to support its AI systems and diversify its hardware supply chain.1 This initiative reflects a strategic shift from its earlier, more ambitious plan to establish a network of foundries, which was deemed impractical due to high costs and extended timelines. By designing proprietary chips, OpenAI seeks to reduce reliance on external suppliers like Nvidia, whose GPUs currently dominate the AI hardware market. Specifically, OpenAI will use Broadcom to build inference chips, which are expected to experience greater demand than training chips in the years ahead as AI applications are deployed.2 Broadcom is already a key AI chip supplier to companies like Alphabet and Meta, and OpenAI’s move aligns with other tech giants, such as Amazon and Microsoft, which have pursued custom chip development to enhance performance and control costs. The manufacturing collaboration with TSMC highlights how AI players are increasingly leveraging partnerships and a mix of internal and external approaches to secure necessary compute supply, broadening out the AI ecosystem.

Defense Technology

Industry Heavyweights Partner to Enhance European Tank Production

Leonardo and Rheinmetall, two leading European defense technology suppliers, are forming a 50:50 joint venture to establish a major presence in European tank production. The venture’s main objective is to support Italy’s armed forces by developing the next-generation Italian Main Battle tank (MBT) and the Lynx platform for the Armored Infantry Combat System (AICS), both key elements of Italy’s land systems modernization program.3 The Panther KF51 developed by Rheinmetall will be the basis for the new main battle tank to replace the Ariete in the Italian army. The Italian AICS program involves the procurement of over 1,000 armored combat systems in 16 variants in the future. In addition to the classic infantry fighting vehicle, there will be anti-aircraft (Skyranger), reconnaissance and anti-tank versions.4 Plans also include producing related vehicles, such as recovery, engineering, and bridge-laying units. The companies anticipate significant international demand for these advanced combat systems, offering broad sales potential in markets focused on modernizing their military assets.5

Healthcare Innovation

Drug Makers Are Racing to Find the Next GLP-1 Breakthrough

In the coming months, data will be released for several new drugs entering the lucrative weight loss therapy market, positioning them as potential competitors to Novo Nordisk and Eli Lilly’s popular obesity treatments. Amgen is set to report Phase 2 data for its GLP-1 drug MariTide by year end.6 This treatment targets the same two gut hormones, GLP-1 and GIP, as current drugs, but it requires only a monthly injection, in contrast to the weekly shots needed with Wegovy and Zepbound.7 If successful, MariTide could progress to Phase 3 trials and potentially receive approval by 2027, with sales projected to reach $4.2 billion by 2030.8 Novo Nordisk will also release Phase 3 data for its obesity candidate, CagriSema, a combination of the GLP-1 drug semaglutide, used in Ozempic and Wegovy, and cagrilintide, which activates amylin and calcitonin receptors. Approval could come as early as 2025, with sales projected to reach $21.0 billion by 2030.9

Lithium & Battery Technology

Mining Giant Expands Lithium Dominance

Major miner Rio Tinto announced its intended acquisition of U.S. lithium producer Arcadium Lithium for $5.85 per share, or a deal totaling $6.7 billion. Arcadium Lithium, which was formed in early 2024 as the result of a merger between Livent and Allkem, is a vertically integrated lithium chemicals producer with capabilities in lithium chemicals manufacturing and extraction processes. Arcadium’s current annual lithium production capacity across a range of products including lithium hydroxide and lithium carbonate is 75,000 tonnes lithium carbonate equivalent, with expansion plans in place to more than double capacity by the end of 2028.10 Should the deal finalize, Rio Tinto could become the third-largest lithium producer globally, behind Albermale and SQM.11 The move comes as mining companies look to secure essential minerals for the ongoing global energy transition, and as lithium prices have come under pressure due to Chinese oversupply.

Data Centers & Digital Infrastructure

Data Center Buildouts Show No Signs of Slowing Among Big Tech

The ongoing AI boom continues to drive a surge in data center construction, particularly among major cloud providers. Amazon recently purchased a 220-acre site in Phoenix, Arizona, for $277 million to build a new data center campus. Just east of this site, Amazon is already constructing four other data centers, each covering 227,000 square feet.12 Additionally, Amazon filed for a 3.8-million-square-foot data center campus in Louisa County, Virginia, aiming to expand its substantial footprint in Northern Virginia.13 Microsoft announced a $1 billion investment to develop three data center campuses in Ohio, including $420 million allocated to a 245,000-square-foot campus in New Albany. The New Albany City Council approved a 15-year tax abatement for Microsoft, with construction scheduled to begin in July 2025 and completion expected by late 2027.14 Meanwhile, Google is considering a $600 million expansion of its data center in the Charlotte area, supported by recently approved tax incentives.15

Autonomous & Electric Vehicles

Electric Vehicles Progress Towards Autonomous Futures

Tesla unveiled its robotaxi, the Cybercab, along with a robovan that could fit up to 20 people or be used for commercial purposes.16 The Cybercab is designed to be fully autonomous with no wheels or pedals and will charge via wireless induction technology, highlighting Tesla’s ongoing advancements towards unsupervised full self-driving (FSD) models. Tesla expects the Cybercab to hit the market before 2027 with a price tag of less than $30,000. Also, Tesla aims to implement unsupervised FSD capabilities in the Model 3 and Model Y EVs within the next year.17 It’s expected that Tesla’s existing vehicle fleet will be available on the company’s rideshare service once the EVs are combined with FSD and Tesla’s upcoming rideshare mobility app, which could potentially unlock significant value for the industry.

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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The value of securities issued by companies in the energy sector may decline for many reasons, including, without limitation, changes in energy prices; international politics; energy conservation; the success of exploration projects; natural disasters or other catastrophes; changes in exchange rates, interest rates, or economic conditions; changes in demand for energy products and services; and tax and other government regulatory policies.

Data Center REITs and Digital Infrastructure Companies are subject to risks associated with the real estate market, changes in demand for wireless infrastructure and connectivity, rapid product obsolescence, government regulations, and external risks including natural disasters and cyberattacks.

Carefully consider the Funds’ investment objectives, risk factors, charges, and expenses before investing. This and additional information can be found in the Funds’ summary or full prospectus, which may be obtained by calling 1.888.493.8631, or by visiting globalxetfs.com. Please read the prospectus carefully before investing.

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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.

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