Oil’s Loss Is Tech’s Gain
One of the closest things there is to an unstoppable force meeting an immovable object happened 31 years ago.
That’s when 240,000 tons of the Exxon Valdez supertanker crashed into an Alaskan reef, ripping a hole in a massive hull nearly 1,000 feet long.
Millions of gallons of crude spilled into Alaska’s Prince William Sound, leading to one of the biggest environmental disasters in history.
We witnessed a similar oil disaster last month.
A price war among oil producers was already flooding the market and lowering prices earlier this year. Then COVID-19 hit the world economy, crashing demand as people stay home and consume less of the resource.
The collision between the forces of supply and demand has ripped a gash in the oil market, sinking the price of the commodity to the lowest levels we’ve ever seen. Prices have plunged into negative territory as the world runs out of places to store the stuff.
Prices will eventually begin to recover, but this is not a one-off event. Things will never be the same, and the environment for oil is set to change forever.
People are finding new ways to survive and thrive in the middle of dealing with COVID-19, and those changes will be enduring.
Employees are working from home over remote connections. Meetings and events are now being held online. People are shopping from home. They’re entertaining themselves from home. They’re even remotely receiving health care.
Many are finding that they like working remotely and that they’re just as productive, while also saving time and money by eliminating a commute. Employers are starting to notice this too.
Habits are starting to form, and they will stick after the coronavirus crisis is in the rearview mirror.
But the same forces that will reduce demand for oil will raise demand for technology.
Demand for faster and more ubiquitous internet connectivity will eventually speed adoption for 5G technologies, benefiting network equipment companies like Qualcomm (NASDAQ: QCOM) and others.
Cloud computing companies like IBM (NYSE: IBM) will see increased demand as will artificial intelligence and data center chipmakers like Nvidia (NASDAQ: NVDA) and Advanced Micro Devices (NASDAQ: AMD).
Nvidia’s GPU accelerators already lead in cloud computing chips among big providers like Amazon and Microsoft, but the company is now going to be in an even stronger position.
Nvidia recently got the go-ahead from the Chinese government to acquire high-speed data center networking specialist Mellanox, so now the deal can close.
Nvidia’s super-fast compute technology is the secret sauce behind the company’s past success. But data center computers have to be able to move data fast too, and here Mellanox, with some of the world’s fastest solutions, will help make the combined company an even more dominant force.
People are looking to technology to solve the problems caused by stay-at-home orders across the country… and tech is delivering.
The world’s more connected than ever before.
And when the dust settles on COVID-19, tech names will outshine the rest.
To a bright future,