Today's Big Tech Stocks Lie
Companies / Tech Stocks Jun 05, 2013 - 12:03 PM GMTBy: Money_Morning
Michael A. Robinson writes: There's a number floating around the tech industry that is nothing short of amazing.
And it adds up to big money...
Here's the thing. Noted tech analyst Mary Meeker delivered a powerful message last week that turned the industry on its ear.
Speaking at the D: All Things Digital conference in southern California, Meeker revealed a stat that explains the force behind the unprecedented wave of tech innovation that's fueling the market's huge rally.
Meeker noted that people are using the Web to share roughly 500 million photos.
Not monthly, mind you. Not even weekly, but every single day.
As incredible as that sounds, it actually gets better -- the number is set to double in the next year...
No, that's not a misprint. By the end of 2014, we'll be sharing some 1 billion photos every 24 hours, or 41.6 million per hour.
Talk about a tidal wave...
As recently as 2009, shutterbugs exchanged on any given day roughly 75 million photos. So, we're talking about a more than 10-fold increase in roughly six years.
If that doesn't define exponential growth, I don't know what does...
The Big Lie
I bring this up for a very simple reason. See, it's gotten fashionable these days to predict that the era of exponential growth in technology is coming to an end -- and soon.
If that's true then the entire pace of change is set to hit a brick wall. In turn, that would slow the rate of everything from medical breakthroughs to faster computer speeds to the number of new IPOs that will come to market.
Since America's economy remains rooted in high tech, that also would mean markets across the board would slow to a crawl. Not to mention price appreciation for tech and other growth stocks.
Well, rest assured -- nothing could be further from the truth. Fact is, predicting the end of exponential growth is the biggest lie in tech today.
Let me explain...
See, since the mid-1960s the tech industry has run on something known as "Moore's Law." Simply stated, the law holds that the number of transistors you can put on a semiconductor doubles roughly every two years.
And regularly as clockwork the breakthroughs have kept on coming. That's why your smart phone runs thousands of times faster than the computers NASA had for its moon shots in the late 1960s.
Even before I read Meeker's comments, The Big Tech Lie was on my mind. Fact is, even some tech execs who should know better are predicting the imminent decline of Moore's Law.
Just a few weeks back I read a disturbing report quoting a senior exec at none other than chip maker Advanced Micro Devices (NASDAQ: AMD).
PC Magazine quoted chief product architect John Gustafson as saying the end of Moore's Law is on the horizon. To someone like me, who's been around this field for decades, that just didn't ring true.
Turns out, AMD is having a tough time getting to the next generation of semiconductors, what are known as 20 nanometer (nm) chips.
To give you a sense of the scale we're talking about, 20nm chips are expected to pack between 8 to 12 billion transistors on a chip roughly the size of a postage stamp.
Straight up, AMD's product chief is dead wrong about the death of Moore's Law. In fact, every time I read another story about the Big Tech Lie, I just shake my head in disbelief.
Trust me, tech investors have nothing to fear. Moore's Law is alive and well...
Law-Abiding Tech
Just take a look at what's happening with computers. The industry is set to move into 3D technology. That's important because right now chips basically operate in only two dimensions, left and right.
But by going vertical, the industry can pack even more transistors onto a chip. That means a whole new generation of ultra-fast processors will power everything from PCs to tablets to smart phones to super computers.
Several companies are pushing this next-gen technology right now. Chip maker Intel Corp. (NASDAQ: INTC) plans to hit the market with 3D chips later this year.
The industry leader wants to use them in smart phones because the chips are not only more powerful but they consume less power, which helps extend battery life.
For the long term, IBM (NYSE: IBM) is working with 3M Co. (NYSE: MMM) on a type of technology that could result in chips that someday run 1,000 times faster than what's on the market today.
The two tech giants are working on a new way of stacking processor chips on top of each other. It's called "3D stacking." Think of it as making a miniature 10-story building so small you can't see them with the naked eye.
For its part, Micron Technology Inc. (NASDAQ: MU) has developed 3D tech for memory modules, which computers use to store and access data. The small-cap firm recently unveiled what it calls a "Hybrid Memory Cube."
The stats for this device are just off the charts. It will run 15 times faster, use up to 70% less energy, and will take up 90% less space.
Micron is part of industry consortium working in this area. Other players include Samsung Electronics Co. Ltd. (KSE: 005930), the South Korean heavyweight that's one of the world leaders in mobile phones, tablets, TVs, LCD panels and semiconductors.
Other group leaders include chip designer firm ARM Holdings PLC (NASDAQ: ARMH), Hewlett Packard Co. (NYSE: HPQ), and Altera Corp. (NASDAQ: ALTR).
These are just a few examples of tech firms that stand to grow their sales, profits and share-price appreciations from the continued advance of Moore's law.
I believe we will see dozens more examples just in the next few months. These advances will touch everything from smart phones to tablets to online video to ultrafast Web connections.
In other words, Moore's Law is going to push the tech rally for the next several years.
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Source :http://moneymorning.com/2013/06/05/the-big-lie-in-tech-today/
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