Could Innovation Power the Next Decade?
Technological innovation has long been a key driver of productivity and economic growth, but we believe something bigger is happening right now. The pace of innovation is accelerating in ways that could unlock new levels of output, efficiency, and ultimately, potential long-term wealth creation.
In our latest Alger's Capital Markets report presented by Dan Chung and Brad Neuman, CFA , we explore this convergence of breakthroughs—spanning artificial intelligence, automation, data science, connectivity, and more—and how it’s reshaping the economy.
Innovation Fuels Productivity
An important (but often overlooked) force behind rising GDP is productivity. How much output can be generated per hour of labor? Over the long term, sustained gains in productivity are largely driven by innovation. And today, we’re witnessing a sharp acceleration. Compared to computer processors, AI is progressing at a much faster pace that far outstrips Moore’s Law, as shown in the chart below.
Source: Intel, Microsoft 4/30/25 earnings call. Moore’s Law refers to the length of time that it takes for the number of transistors per integrated circuit to double. Doubling time for AI refers to model capabilities. The calculation period used for AI was 2012-2024.
To put it in perspective: if a 6-inch plant grew at the historical pace of computing progress, it would reach 16 feet in ten years. At AI’s current speed? That same plant would grow to outer space.
The Convergence Driving Connected Intelligence
Every few decades, a new technological revolution changes how we live and work. The steam engine. Electricity. The internet.
We believe that today, we’re in the Age of Connected Intelligence. Today’s innovations aren’t developing in isolation but are reinforcing one another. AI relies on data, which relies on cloud infrastructure, which is expanding owing to semiconductor advances. Together, they form a feedback loop of progress, driving adoption faster than most forecasts can keep up with.
This convergence is at the heart of the Connected Intelligence age. Machines are learning from data, adapting in real-time, and augmenting human decision-making at unprecedented speed and scale.
Source: Carlota Perez, “Technological Revolutions and Financial Capital,” Edward Elgar Publishing, 2002, and Alger for the last period of technological change.
Uncovering Potential Opportunities in Innovation
History shows that the long-term impact of breakthrough technologies tends to be underestimated, particularly in the early phases of adoption. Consider these charts below comparing initial forecasts to actual users.
Source: The Economist 10/7/99 – “Cutting the Cord” and World Bank 2024, Morgan Stanley Research, Global Technology, North America, (2024), Morgan Stanley AI Guidebook: Fourth Edition, January 23, 2024, and Alger.
This disconnect can be especially relevant for ETF construction. As newer technologies mature and enter mainstream usage, their weight in traditional benchmarks may still lag behind their economic significance. That’s where Alger ETFs may provide investors with exposure to potential opportunities not yet uncovered by the wider market.
Alger’s ETF lineup offers a range of strategies designed to help investors access transformative change:
Whether you’re seeking targeted exposure, long-term quality, or broad-based innovation, Alger ETFs are built to align with your investment goals.
Learn more about Alger ETFs, important disclosures and how to invest. Subscribe to The Alger ETF Angle to stay updated on the latest ETF and innovation trends. For more market insights, follow Alger on LinkedIn and Instagram, and Alger CEO and CIO Dan Chung on LinkedIn.