The Next Big Theme: October 2024

Defense Technology

Drone Systems Gain Further Momentum, Signaling Shift in Modern Warfare Tactics

U.S. drone supplier AeroVironment inked a $1 billion contract with the U.S. Army to supply its Switchblade loitering munitions for infantry battalions.1 Switchblade drones combine surveillance capabilities like any other drone but can also be used as guided missiles capable of destroying tanks, light armored vehicles, hardened targets, and enemy personnel. The U.S. Army has used Switchblades for over a decade, and their effective deployment by Ukrainian forces has highlighted their broader strategic utility and favorable economics for a less financially resourced military. The United Kingdom is the only other current Switchblade operator, but countries such as like France, Lithuania, and Australia have all signed deals to buy the system since war began in Ukraine.2 Combined, these developments demonstrate how mature and effective drone systems have become and how this market is reshaping warfare.

Artificial Intelligence

AI Excitement Heads to the IPO Market

Cerebras systems, which designs and produces semiconductors, supercomputers, and provides additional AI and software services, filed with the U.S. Securities and Exchange Commission to test the public markets. The initial public offering (IPO), which will be the first for a generative AI company, is possible later this year.3 Cerebras differs from most AI chip companies today by taking a Wafer Scale Engine (WSE) approach to AI computing. In a typical chip manufacturing process, a wafer is sliced into multiple smaller chips, acting as an independent processor. Conversely, the WSE approach uses an entire wafer as a single, integrated processing unit. The WSE approach aims to overcome the limitations of conventional chip scaling, with the WSE’s larger size offering potential advantages for AI workloads such as increased parallelism, reduced latency, and memory proximity. The WSE approach gives Cerebras a compelling value proposition for both the training and inference markets. In our view, it has the potential to bring a unique AI hardware play to the market.

Lithium & Battery Technology

U.S. Battery Manufacturing Supply Chain Receives a Boost From Government Investments

The Department of Energy (DOE) announced over $3 billion in funding through the Infrastructure Investment and Jobs Act (IIJA) to spur the domestic production of advanced batteries and battery materials. In total, the DOE announced funding for 25 projects across 14 states, covering the entire battery manufacturing supply chain, from sourcing and processing critical minerals like lithium, graphite, and manganese to building and recycling batteries.4 Two of the largest grants, up to $225 million each, are for projects extracting lithium from brine. Among these is a joint partnership between Standard Lithium and Equinor that is expected to produce up to 45,000 metric tons of battery-quality lithium carbonate over two decades.5 With batteries essential for renewable energy grids and the electrification of the transportation industry, this funding could help the U.S. expand its role in global battery production.

Healthcare Innovation

Breakthrough Schizophrenia Treatment Gets the Green Light

The U.S. Food and Drug Administration (FDA) approved Bristol Myers Squibb’s oral schizophrenia drug for adults, Cobenfy. As the first schizophrenia treatment approval in over 30 years, Cobenfy is a novel pharmacological approach that targets cholinergic receptors as opposed to dopamine receptors, which has long been the norm.6 An estimated 2.8 million people in the United States suffer from schizophrenia, and it is among the top 15 causes of disability worldwide, with patients at higher risk of early death.7,8 While the current standard of care can be effective in managing symptoms, up to 60% of patients experience inadequate improvements in symptoms or intolerable side effects during therapy. In clinical trials, Cobenfy helped manage common schizophrenia symptoms such as hallucinations, delusions, and disorganized thinking, potentially providing patients with an effective new alternative.9

Clean Energy

Nuclear Power Gets a Vote of Confidence with Three Miles Island Reopening

Constellation Energy plans to restart the Three Mile Island nuclear plant by 2028, subject to Nuclear Regulatory Commission approval. Constellation, which will invest $1.6 billion to extend the plant’s operations potentially until 2054, signed a 20-year power purchase agreement (PPA) with Microsoft, Constellation’s largest ever PPA.10 Microsoft’s interest reflects a broader trend of tech companies turning to nuclear energy to meet rising electricity needs while adhering to sustainability goals. Microsoft aims to use the plant’s carbon-free electricity to support its growing data center operations, driven by the increasing demands of AI.11 After decades of nuclear plant shutdowns, Three Mile Island’s restart is significant because it signals a revival of nuclear power, a clean and reliable energy source. Increasing demand from sectors like tech and electric vehicles has nuclear energy becoming essential to balance the energy grid and meet future demands. With bipartisan political support, it appears the nuclear energy market has a growing opportunity to achieve those goals.

Data Centers

New AI Clusters With Over 100,000 GPUs Announced

Elon Musk’s xAI launched one of the world’s largest AI training systems, the Colossus supercomputer, which uses 100,000 Nvidia H100 GPUs.12 This system, which xAI brought online in just 122 days, is set to double in size in the coming months with an additional 50,000 Nvidia H200 GPUs. Colossus will power xAI’s efforts to train the upcoming Grok 3 large language model (LLM), requiring up to 150 megawatts (MW) of electricity.13 With global AI chip shortages easing, companies like xAI are able to scale up their systems with larger orders for GPUs. Meta Platforms is also nearing the deployment of its own AI cluster, which features 100,000 Nvidia H100 GPUs to train the next generation of its Llama models. The cost of the GPUs alone could exceed $2 billion.14

THE NUMBERS

The following charts examine returns and sales growth expectations by theme, based on their corresponding ETFs or indices.

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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