The Big Data Revolution
In a world increasingly driven by data, the scale at which information is being generated is extraordinary. How might this explosion of new information create potential opportunities for long-term investors?
In today’s economy, we believe data has become the new oil—an essential raw material fueling digital transformation. Businesses increasingly need to digitize and organize their data to automate processes and improve efficiency. How might investors potentially benefit from the exponential growth of global data?
- The sheer amount of data being generated around the world is astounding. By the time you finish this sentence, approximately 50 million emails will have been sent, 1.3 billion Google searches performed, and 145,000 Instagram Reels will have been shared.1 As shown in the chart above, data creation, consumption, and storage have grown 75-fold since 2010. This surge has been driven by several factors such as the widespread adoption of smartphones, the rise of the Internet of Things, cloud computing, and increasing engagement with video streaming, social media, and e-commerce platforms. At the same time, the costs of hardware and software supporting this data explosion have fallen significantly on a quality-adjusted basis.2
- According to IDC, the volume of global data is expected to more than double by 2028.3 In addition to the previously discussed drivers, we believe synthetic data could emerge as a key contributor to this trend. Generated by artificial intelligence (AI) to mimic real-world datasets, synthetic data enables machine learning models to be trained and tested without relying on sensitive or limited information. By replicating scenarios like self-driving car simulations, AI algorithms learn by identifying patterns and improving performance through iterative training and testing (see Reflections of Reality: Digital Twin Technology). In some cases, synthetic data could be even better than real world data for training AI models.4
- As advancements in AI training continue to drive progress in our interconnected world (see Scaling Up Intelligence), we believe the pace of data generation could potentially accelerate going forward. In our view, companies providing the infrastructure to support this growth (see AI Enablers) and those businesses specifically leveraged to the expansion of data (see Data Driven) may present compelling opportunities for long-term investors.
1 Domo, Inc. 2023: Data Never Sleeps 11.0 and Alger estimates.
2 U.S. Bureau of Labor Statistics.
3 IDC and Statista estimates.
4 Radford, A., Wu, J., Child, R., Luan, D., Amodei, D., & Sutskever, I. (2019). Language models are unsupervised multitask learners.
The views expressed are the views of Fred Alger Management, LLC (“FAM”) and its affiliates as of January 2025. These views are subject to change at any time and may not represent the views of all portfolio management teams. These views should not be interpreted as a guarantee of the future performance of the markets, any security or any funds managed by FAM. These views are not meant to provide investment advice and should not be considered a recommendation to purchase or sell securities.
Risk Disclosures: Investing in the stock market involves risks, including the potential loss of principal. Growth stocks may be more volatile than other stocks as their prices tend to be higher in relation to their companies’ earnings and may be more sensitive to market, political, and economic developments. Past performance is not indicative of future performance. Investors whose reference currency differs from that in which the underlying assets are invested may be subject to exchange rate movements that alter the value of their investments. Companies involved in, or exposed to, AI-related businesses may have limited product lines, markets, financial resources or personnel as they face intense competition and potentially rapid product obsolescence, and many depend significantly on retaining and growing their consumer base. These companies may be substantially exposed to the market and business risks of other industries or sectors, and may be adversely affected by negative developments impacting those companies, industries or sectors, as well as by loss or impairment of intellectual property rights or misappropriation of their technology. Companies that utilize AI could face reputational harm, competitive harm, and legal liability, and/or an adverse effect on business operations as content, analyses, or recommendations that AI applications produce may be deficient, inaccurate, biased, misleading or incomplete, may lead to errors, and may be used in negligent or criminal ways. AI companies, especially smaller companies, tend to be more volatile than companies that do not rely heavily on technology.
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The following positions represent firm wide assets under management as of October 31, 2024: Alphabet Inc. 1.9%, Meta Platforms Inc. 5.01%., Domo, Inc. 0.0%.
Domo, Inc. is a cloud-based business intelligence platform that integrates data from various sources to provide real-time insights, visualizations, and analytics.
IDC (International Data Corporation) is a global market intelligence and advisory firm.
Statista is a German company specializing in market and consumer data.
Alger pays compensation to third party marketers to sell various strategies to prospective investors.
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