The year has seen a sea of change in the market and the economy.
Some people are starting their businesses, while others are seeking investment opportunities that can help them ride out the volatile stock market.
If you’re looking to start or invest in a company, it’s important to enter the right industry. So, what are the best industries to invest in this year?
Here are some of the top industries in the U.S. and worldwide right now that are on track to become the most profitable.
Biotechnology refers to the science that manipulates living organisms to create commercial products.
Many are used in high-growth industries, such as health care, food and agriculture, biodegradable plastics, biofuels and other environmental applications. In particular, biotech products are key to the invention of new medicines that stand to save lives for years to come.
According to Grand View Research, the global biotechnology market is expected to reach $2.44 trillion by 2028, at a compound annual growth rate (CAGR) of 15.83%. With such a high potential and growth rate, no wonder the industry is attracting many entrepreneurs and investors.
However, with the high reward potential comes elevated risks. Many biotech investment opportunities are speculative and you may be venturing into uncharted territories. If you don’t have a high risk tolerance or prefer to invest in opportunities that have a long and steady record, biotech may not be the best option for you.
2. Artificial Intelligence
MarketsandMarkets forecasts the global artificial intelligence (AI) market is likely to reach $309.6 billion by 2026, at a CAGR of 39.7%. From machine learning and predictive analytics to natural language processing and neural networks, AI applications are growing by the minute.
There are many ways to get started with AI and numerous industries that stand to be impacted by its rise, not limited to logistics and delivery, customer relationship management, data analytics, marketing, human resources and manufacturing, among others. Examples of product development opportunities include autonomous vehicles, robotic process automation, virtual reality, chatbots and payment services, to name a few.
There are always higher risks associated with starting businesses or investing in emerging technologies that are fast-evolving. For example, security, privacy and ethical issues are some key concerns about various AI-driven technologies and will evolve as the industry matures. Prepare to stay nimble and adaptive to market and regulatory forces.
3. Home Technology
Home technology is another one of the best types of businesses to invest in at the moment. Thanks to the pandemic, personal entertainment and digital gadgets for households have been on the rise.
Needless to say, at-home devices, such as fitness equipment, video games and consoles, streaming players, home monitoring equipment, voice-assisted devices and smart technologies (e.g., lighting, thermostats, speakers, TVs, etc.), have sparked the public’s interest.
In the third quarter of 2021, the global market for smart home devices alone grew 10.3% year over year, according to International Data Corporation (IDC).
4. On-Demand Services
Why wait when you can have it now? Consumer desire for near-instant gratification is demonstrated in the popularity of such services as Uber, Netflix, GrubHub and Amazon, where 1-click, 1-hour or 1-day deliveries are possible.
In 2022, the year-over-year growth rate for this niche market was expected to be just over 52%. Additionally, online on-demand home services that are expected to increase by $4.75 billion from 2021-2026. These are just a few statistics illustrating why on-demand services are one of the best industries to invest in right now.
5. Green Energy
According to the Center for Climate and Energy Solutions, renewable energy is the fastest-growing energy source in the U.S.
Intending to achieve net-zero emissions no later than 2050, the U.S. government will be taking actions to support green energy solutions, such as promoting the use of electric vehicles, solar panels, wind power generators, rainwater harvesting systems, energy-smart appliances and technologies that can optimize the use of energy.
Whether you’re starting a business in green energy or investing in one, it’s important to consider how the solution can be adopted by the mass market. Having a sound business case, a plan to bring the technology to market and a strategy to encourage adoption is key to achieving long-term success.
6. Environmental, Social and Governance
In a similar vein, businesses that focus on environmental, social and governance (ESG) are gaining traction. The focus on ESG was accelerated with the pandemic, which made many people more aware of how businesses were treating their stakeholders, suppliers, employees and customers. Additionally, more consumers are considering the ecological and social impacts of the products they use and are willing to spend more for brands that are environmentally and socially responsible.
While making ESG investments, you should strike a balance between ethics and performance. Also, keep in mind that the definition of “socially responsible” can be subjective. Some companies claim to be socially responsible but in practice, they may not meet your expectations. Therefore, it’s important to vet your choices before making a decision.
7. Healthcare and Pharmaceuticals
COVID highlighted how essential the healthcare sector is. Of course, new challenges and diseases will continue to emerge. Additionally, the aging population in the U.S. and other developed countries will increase the demand for treatments and health care services for decades to come.
According to the U.S. Bureau of Labor Statistics, employment in health care occupations is projected to increase 13% from 2021-2031 and add about 2 million new jobs to the economy. Besides businesses that directly deliver health care services, companies that support these professionals are also expected to blossom.
However, some risks are associated with entering or investing in the healthcare industry. For example, the shifting insurance policies and Medicare single-payer system, the large number of uninsured Americans, the need to control costs, the myriad of regulatory controls and the increasing influence of consumerism can pose challenges now and in the future.
The pandemic also accelerated the shift toward telemedicine, and both patients and physicians are now recognizing the convenience, cost-savings benefits and ability to improve treatment outcomes offered by this option. Not to mention, telemedicine lowers the cost for insurance companies.
A report by Frost & Sullivan found that the telehealth industry will see a CAGR of 38.2% from 2020-2025.
Because telemedicine is a relatively new discipline, practitioners and technology providers are still ironing out the kinks. In particular, with more stringent industry regulations (e.g., Health Insurance Portability and Accountability Act, or HIPAA), it could become increasingly costly to enforce data privacy, control the prescription of certain drugs and stay compliant with new guidelines.
The accelerated pace of digital transformation coupled with the rising cost of data breaches means the demand for cybersecurity will continue to climb for the foreseeable future, making this another one of the top growing industries to invest in this year. Not to mention, no matter how the economy is performing, the need won’t go away.
According to Gartner, the global information security market was projected to be $170.4 billion in 2022 alone. There are many types of cybersecurity products and services you can offer, such as cloud security, endpoint security, network security, infrastructure protection and more.
If you decide to enter the industry, be prepared to invest substantially in increasing your team’s capabilities and expertise to stay current with fast-changing regulations, business environment and cybersecurity threats. Also, expect some tough competition. It’s important to find your unique positioning in the market.
10. Cloud Computing
As the need to facilitate remote working and real-time collaboration has increased, companies require technologies that will enable work to be done efficiently from anywhere and at any time. Coupled with advantages such as scalability, flexibility and enhanced security, cloud computing is now the de facto solution.
The global cloud computing market was valued to be $368.97 billion in 2021 and is projected to expand at a CAGR of 15.7% from 2022 to 2030, according to Grand View Research.
Be prepared to invest in IT security, data protection and privacy measures in the coming years to stay relevant and competitive while avoiding potential liability issues if breaches occur.
11. Internet of Things
Another one of the hottest industries right now is the Internet of Things (IoT). Indeed, IoT applications and devices are growing rapidly.
Besides its heavy integration in the consumer electronic market, IoT subsystems, such as industrial internet and connected cities, are emerging quickly to automate factories and urban areas. Meanwhile, digital virtual assistants, such as Amazon’s Alexa and Google Assistant, are becoming ubiquitous.
According to Statista, the global market for IoT end-user solutions will reach nearly $1.6 trillion by 2025. IoT opportunities are everywhere you look — from medical devices and supply chain management to manufacturing and retail. Additionally, the demand for support or new solutions will continue to increase.
This relatively new field comes with its own set of challenges, however. For example, consumer-grade IoT devices often create security liabilities, fragmented IoT technologies can result in connectivity or integration issues and many solutions have still yet to achieve long-term usability.
12. Education Technology
Education technology (edtech) isn’t limited to K-12 schools and colleges; corporations are turning to this industry for training and certification purposes as well. The edtech market is expected to reach $605 billion by 2027, according to Research and Markets.
Interest in online games for learning, growth in hybrid and remote educational models and enhanced connectivity and smart device usage has all contributed to making this market one of the best industries to invest in right now.
13. Financial Technology
Another good industry to invest in is financial technology, or fintech. These types of companies offer alternative financing or banking solutions that differ from conventional bank options in terms of offerings and ease of use, harnessing the power of technology through the internet, software, mobile devices or the cloud.
Fintech providers rely on technology to streamline financial processes, such as loan applications, monetary transactions and account management. Examples include mobile payments, online lending, cryptocurrency and online stock trading.
By 2028, the global fintech market is projected to be $332.5 billion.
Choosing the Right Industry to Invest In Today
No matter which industry you decide to enter or invest in, do your due diligence to understand the business environment and market landscape. Also, consider your capabilities or those of the people leading the company you’re considering investing in.
Thoroughly analyze the competitors or industry participants, distribution patterns and purchasing behaviors. Also, when you conduct market research, use different resources to help you gain a comprehensive understanding of an industry. These can include trade associations, online resources, government guidance, community organizations, financial and business service firms and more.
Lastly, don’t forget to consider the larger social and economic context as well as how unexpected events could impact an industry and your business in the future to ensure long-term success.