Hey friends,

RiskHedge publisher Dan Steinhart and I recently got back from two weeks on the road.

We met 40 innovators across five US cities working on some of the coolest and most important technology you can imagine.

We saw nuclear reactors the size of a shipping container. Satellites that scoop air out of the atmosphere for fuel. Drones that can deliver pig sperm to rural Africa (seriously). And space capsules coming back from orbit carrying grams of drugs worth millions of dollars.

I don’t take these long trips—flying tens of thousands of miles and leaving my wife alone with three kids—for the fun of it. I do it because it helps me see disruptive megatrends before the rest of the world, which means we can position ourselves to profit before others even recognize the opportunity.

From what I saw, I believe one criminally underrated investing opportunity is… the ocean.

On our travels, we met and chatted with half a dozen maritime companies, including defense tech pioneer Anduril. Many of the most exciting opportunities are still private. But you can invest in some of them today.

We recently added one ocean disruptor to our Disruption_X portfolio. Today, I’m sharing the note I sent Disruption_X members when we made that investment.

The ocean is a trillion-dollar economy waiting to be unlocked. Invest accordingly.

• My friend and economist Tyler Cowen likes to frame the world in terms of “overrated” and “underrated.”

(Tyler will speak at the Strategic Investment Conference in a couple weeks. And I’ll be on a panel called “AI, Defense, and the New Battlefield.” Reserve your spot here.)

I love looking at investing opportunities through the “overrated, underrated” lens. It helps you identify hidden edges you can take advantage of in markets, business, and life.

The ocean is a criminally underrated frontier today.

You’re reading this essay thanks to the ocean. The “cloud” is actually underwater. Over 95% of internet data—your emails, bank transfers, and ChatGPT queries—travel through a network of roughly 400 fiber-optic cables resting on the seabed.

Over 90% of everything you own—from the phone in your pocket to the shoes on your feet to the fuel in your car—arrived by sea.

Yet the ocean remains a blind spot. Did you know we’ve mapped more of Mars than our own seabed? Over 80% of the ocean remains unmapped!

For an investor, ocean tech feels like discovering a new continent. A true frontier and blue-world economy waiting to be built—with new opportunities ranging from autonomous shipping to port security to underwater data centers.

• What’s happening in the Strait of Hormuz is forcing us all to pay a lot more attention to the ocean.

We built the entire global economy on seas we can’t fully secure.

Some have proposed having battleships escort cargo ships to ensure safe passage across the Strait. This isn’t a sustainable strategy. Even if you could pull it off for a few weeks, America doesn’t have enough ships to keep it up.

Last year, America made just five ships. China built 1,794. One Chinese shipyard now has more output than the entire US maritime industry combined.

The more serious problem: The ocean, even the 21-mile-wide Strait of Hormuz, is too vast to be policed by humans alone.

The Colombian Navy recently seized a fully unmanned “narco-sub.” It had a Starlink dish and was designed to carry 1.5 tons of cocaine over 800 miles. I’d imagine for every drug boat captured, at least 10 slip through. There’s simply no way to police the vast ocean with human crews.

Today, inspecting a subsea pipeline or cable involves hiring a huge, manned ship that costs $200,000 per day. No wonder “stuff” in the ocean is only checked every year or two.

This will only get worse as the ocean economy grows. And bad actors have already noticed.

• Imagine trying to buy coffee, but the card machine goes dark.

You try to call family to see what’s going on, and the line is dead.

This nightmare scenario happened to 14,000 people on the Matsu Islands near Taiwan. Chinese vessels cut their subsea cables, plunging the island into a digital blackout for a week.

The global web of underwater internet cables is long enough to stretch to the moon and back twice. They’re vulnerable. Taiwan had its internet cables cut nearly 30 times in recent years. Data pipelines in the Baltic Sea have been severed, too.

America’s big tech giants—Meta Platforms (META), Google (GOOGL), Microsoft (MSFT), and Amazon (AMZN)—now account for more than 70% of new underwater data cables.

Meta is currently building the world’s longest submarine cable. Project Waterworth will span 31,000 miles and will cost $10 billion.

• If you’re going to spend billions to build the underwater backbone of the artificial intelligence economy…

You’re also going to spend billions to protect it.

Putting more humans on ships isn’t the way to do this. The only scalable strategy is to make it autonomous. In other words: the ocean needs to police itself.

Just as flying drones are redefining land warfare, drone boats and submarines are already redefining ocean warfare.

Ukraine lacks a navy but still controls the Black Sea with cheap, autonomous hardware, including its “Sea Baby” drone boats. Ukraine has sunk or disabled a third of Russia’s Black Sea Fleet and has forced the remaining ships back.

Now picture what happens as those vehicles get smarter, faster, and harder to detect.

The US Navy aims to have 130 unmanned ships in the water this year. Within five years, I bet we’ll have 100X—or even 1,000X—more.

The ocean is a trillion-dollar economy waiting to be unlocked by robots. The high seas have been our largest blind spot. And to disruption investors like us, blind spots are opportunities.

• We’ve found a stock sitting at the dead center of this story.

It powers the underwater robots the West is mass-producing right now. And most folks have never heard of it.

Disruption_X members can read about it here.

Stephen McBride

Chief Analyst, RiskHedge

PS: If you’re interested in joining us at the Strategic Investment Conference, it’ll be live-streamed starting May 4. I’ve been part of it for a long time, and it’s truly a great event. You can see the full lineup of speakers and more details at this page.