Technology isn’t stagnant. It’s always evolving.
Throughout history, we’ve seen that when technology evolves particularly fast, the world undergoes a mass, disruptive makeover. Historians dubbed them “Industrial Revolutions.”
The First Industrial Revolution happened about 255 years ago – in the late 1700s – when humans learned how to harness the power of steam to mechanize the production of physical items.
About a century later, the Second Industrial Revolution began, when humans learned about electricity, gas and oil, and leveraged these newfound powers to unlock a novel era of transportation and mass production.
Then, about a century thereafter, the Third Industrial Revolution began, when digital machines like computers, cellphones and TVs emerged.
Each time one of these Industrial Revolutions happens, the world changes. Forever. And in that change, old technologies fall by the wayside, while new technologies become ubiquitous, laying the foundations for a more efficient future.
Right now, we are in the midst of a Fourth Industrial Revolution.
It’s a world-changing shift toward automated, hyper-connected, hyper-efficient and — in some cases — decentralized factories, enabled by breakthrough advancements in Big Data, the Internet of Things (IoT) and cloud computing.
In essence, we are pivoting from a world with a few huge factories that run on old machines and utilize human labor, toward a world with multiple smaller factories that run on smart, internet-connected machines and utilize automated technologies and software.
It’s an enormous shift.
Perhaps obviously — and much like previous Industrial Revolutions — this shift toward Industry 4.0 will spark significant disruption across the world’s supply chain.
And… as longtime readers know… where there’s disruption, there’s opportunity.
One of the biggest opportunities in the Fourth Industrial Revolution? 3D printing.
You heard that right. 3D printing. The industry that was hyped up back in 2013 as a novel concept that would take over the world as everyone replaced their 2D printers with 3D printers and transformed their homes into “mini-factories.”
Of course, that didn’t happen.
The reality is that additive manufacturing (as industry insiders like to call it) is a complex, costly, laborious and time-consuming process which most consumers have no use for in their homes.
To that end, the hype surrounding 3D printing has fizzled out over the past several years, and AM stocks have been some of the biggest busts on Wall Street.
But… over the past few years… additive manufacturing has quietly emerged as a core technological component of Industry 4.0.
Here’s the story:
The first generation of industrial AM machines were glacially slow, exorbitantly expensive, and incredibly niche since they could only print in plastic and therefore could only be deployed for product prototyping.
These machines, however, have made huge advancements in terms of cost, speed and ability since 2013, to the point where they are now capable of quickly and cost-effectively mass-producing metal end-use parts on the factory floor.
That’s huge. That means 3D printers can now be integrated into assembly lines.
But why would a company do that?
Because the emergence of Industry 4.0 has raised the standard for customization and automation in the world’s supply chains. That is, tomorrow’s supply chains will need to be automated (to save on labor costs) and need to be able to produce customized parts (to meet growing consumer demand for custom products).
As it turns out, AM is particularly good at customization and automation. You can make any design you want in a software program, send it to the 3D printer and the printer can produce that design — all without needing any human labor on the manufacturing side.
That represents a paradigm shift from current manufacturing processes, wherein entire assembly lines have been constructed to efficiently build the same thing over and over again. Modifying those assembly lines to create something different or specialized is a labor- and time-intensive process.
As such, companies aren’t going to do that. Instead, they’re going to rejig their assembly lines over the next few years to include metal AM machines alongside CNC machines and casts to create a hyperefficient manufacturing process than can cost-effectively mass-produce anything.
Insiders are calling this the emergence of the Additive Manufacturing 2.0 era – and it’s expected to grow the AM market by more than 1,000%, from $12 billion today, to nearly $150 BILLION by the end of the decade.
A few exciting companies are at the forefront of this emerging hypergrowth megatrend.
My favorite is a metal AM machine maker that was founded by a bunch of MIT alums called Desktop Metal (NYSE:DM). The company’s “secret sauce” is its patented breakthrough technological process called single pass jetting, which enables the company’s layer-by-layer printing process to only have to do “one pass” (other companies have to do multiple passes on each layer). This ultimately results in Desktop Metal printers being the fastest in the industry… by a long shot… which is huge since speed is of utmost importance in assembly lines.
Other names that stand out to me in the Additive Manufacturing 2.0 megatrend are industry leader 3D Systems (NYSE:DDD), AM software provider Materialise (NASDd digital AQ:MTLS), anmanufacturer Protolabs (NYSE:PRLB).
These stocks have largely been “sleepers” on Wall Street over the past few years. But they are starting to “wake up” in a big way, in large part thanks to 3D Systems reporting blockbuster prelim fourth-quarter numbers last week that broadly underscored that 3D printing as an industry is, indeed, making a huge comeback.
In other words, the time to invest in this emerging megatrend is right now — as the industry inflects from several years of sluggish growth and falling stock prices, transitioning to several years of hypergrowth and soaring stock prices.