Beyond AI: Other innovations with the potential to transform the economy

Summary

• While AI dominates current market enthusiasm, history shows that transformative technologies—like the Model T in the 1920s or ride-sharing apps in the 2010s—can emerge unexpectedly to reshape markets and economies.
• Three promising innovations beyond AI show significant potential: autonomous driving changing how we get from point A to point B, nuclear fusion breaking through as a clean energy source and 3D printed construction addressing housing shortages.
• The current bull market, which has delivered 37% returns since Sept. 2023, continues to be driven by technological innovation—following a pattern seen in previous bull markets.

Bull markets and innovation

TIAA Wealth Management Chief Investment Officer Niladri “Neel” Mukherjee has maintained since September 2023 that we’re in the early stages of the next bull market. So far, so good: In the ensuing 17 months, the Standard & Poor’s 500 equity index has returned 37%.¹

Bull markets have always been driven by innovation. In the 1920s, Henry Ford and the Model T helped push the stock market to new highs. In the 1950s, transistors and semiconductors provided the spark. In the 1980s, it was the personal computer. These days, it’s artificial intelligence (AI) that has Wall Street abuzz.

Although AI is hot right now, that doesn’t guarantee it’s the technology the 2020s will be remembered for. In fact, market-transforming technologies sometimes appear out of the blue. When the last bull market began in 2009, for instance, ride-hailing apps and smartwatches didn’t even exist. “By the time it ended in 2020,” says Mukherjee, “Uber had become a verb, and Apple was selling more luxury watches than all Swiss watchmakers combined.”

In the February issue of CIO Perspectives, Mukherjee and his team go beyond AI in exploring the current state of American innovation. With the important caveat that TIAA Wealth Management isn’t currently recommending the companies behind these new technologies—not all innovations are economically viable, after all—they do identify several that may have the potential to be transformative. Click here to read the full report, but here’s a peek at three highlights:

1. Autonomous driving

The Jetsons envisioned a future with flying cars. That kind of future hasn’t arrived, but the next best thing may be close. Despite some setbacks, companies like Tesla, Alphabet’s Waymo and Amazon’s Zoox are forging ahead with autonomous driving, insisting the tech will be ready for full rollout in a few years (albeit with some human supervision still needed as a precaution). According to the consulting firm McKinsey & Company, autonomous driving could generate $300 to $400 billion in annual revenue as early as 2035.²

Alphabet’s Waymo is a driverless ride-hailing service averaging 150,000 driverless trips every week in the cities of San Francisco, Los Angeles, Phoenix and Austin.³ Based on data tracking airbag deployment crashes, injury-causing crashes and police-reported crashes, Waymo says its safety record exceeds the human-driver benchmark.⁴

Tesla unveiled its version of the “Cybercab” at its “We, Robot” event in October 2024. Its futuristic taxicabs have no steering wheels, no pedals and no drivers—just two seats and an autonomous system powered by AI to get passengers to their destinations. The timeline offered by Tesla targeted a production start date for the Cybercab as early as 2027. Critics think this timetable is overly ambitious, but Tesla does have one advantage: existing data from millions of human-operated Teslas on the road, each of which provides the company with a steady stream of driver alerts and other data used to improve Cybercab’s AI.

2. Nuclear fusion

No longer just a punchline from Back to the Future, nuclear fusion may be on the verge of becoming a viable energy source. In late 2022, the U.S. Department of Energy and the National Nuclear Security Administration paved the way for nuclear advancement when they achieved the world’s first fusion ignition in a lab setting that was net energy positive.⁵ In other words, when the fusion reaction reached ignition, the nuclear energy output was greater than the energy required to start the reaction. Unlike nuclear fission, which is generated by the division of atoms—the type of nuclear reaction used in today’s nuclear plants—nuclear fusion occurs when two light atoms combine to form a heavier atom. Also, nuclear fusion leaves no legacy of long-lived radioactive waste.

3. 3D printed real estate and construction

According to Zillow, the United States is grappling with a housing deficit and needs to build 4.5 million new homes.⁶ 3D building material technology could alleviate the shortage. It’s already being used for commercial buildings. In 2024, for instance, Walmart built an 8,000-square-foot, 20-foot-high warehouse in Athens, Tenn., which at the time was the largest 3D concrete printed (3DCP) commercial building of its kind in the nation.⁷ Presently, the cost and time it takes to 3D print a building is roughly the same as traditional construction, but with more experience and the help of AI, the cost is expected to come down over time.

Get personalized insights

Click here to read the full version of February’s CIO Perspectives. For more insights on the market and economy, and to discuss the implications for your investment portfolio and financial plan, please schedule a meeting with a TIAA advisor.