Since the invention of modern robotics in the 1950s, robots have enthralled our imagination. For some, the concept of lifelike machines doing human tasks is fascinating; for others, it is a frightening notion.
However, robots aren’t about replacing people. Instead, they can automatically perform basic tasks and activities to free up our time for more important pursuits. The deployment of automation space procedures throughout businesses has accelerated in recent years, and some projections suggest that the worldwide adoption of robots will accelerate. Spending on robots and robotic process automation could increase by ten between now and 2025, reaching about $210 billion worldwide. As a result, path stocks in robotics companies may be an excellent investment in the coming years.
Overview: Robotics Stocks
The most excellent robotics equities should profit as the world becomes more automated. Robots are currently employed in various settings, including making coffee on an assembly line. According to Allied Market Research, the worldwide robotics firm industry was worth $62.75 billion in 2019. It is anticipated to develop at a rate of 13.5% between 2020 and 2027. If this growth occurs, the size of the robotics sector will reach nearly $189 billion by 2027 if this growth is achieved.
Many companies have a lot of faith in automation, which is why sales of robots and automated machinery keep increasing. Many industries employ robots for various activities, contributing to their growth. For example, many military contractors use uncrewed aerial vehicles to execute operations. In contrast, Amazon utilizes robots in fulfillment centers to assist with on-time delivery. Even surgeons are starting to utilize robotics in the medical field. However, it’s challenging to determine the finest pure robotics firms because of the many ways robots are used in business.
What are Robotics Stocks?
Robots are the study, design, and building of robots. Five Robotics stocks are closely linked to several engineering disciplines, including computer science, artificial intelligence, and bioengineering.
There are many robots, including drones, telepresence equipment, self-driving cars, domestic appliances, toys, efficient industrial machines, etc. As the field of robotics advances, it becomes more likely that robots will be present in our everyday lives.
Companies engaged in the design or construction of robots are the source of robotics equities. In general, they cover:
- Core automation and production. We are pioneers in the realm of automation and technology. Our engineers are experts in creating robots and automated processes.
- Robot technology. Specialize in specific subsets of the robotics market capitalization, such as vision systems, sensors, and video compression.
- Industrial software. Provide industrial software solutions that automate basic tasks and robotics procedures.
- Robotic integration. Robotics may be used to improve their product range, such as home appliances, farming equipment, and aircraft systems.
Features to Look for in Robotics Stocks
Revenue growth: Margin analysis of robotics stocks might be complicated because some software and hardware firms have varying fixed expenses in their production. Looking for firms growing revenue at 10% each year over the next ten years is a great place to start.
Sustainable debt level: Too much debt can stifle development in a field like robotics which is highly competitive. The companies in the sector must be able to move swiftly when trends change, and they must also be able to recycle cash into research and development. A firm with excessive debt will find it challenging to keep up with the competition.
Commitment to innovation: Larger businesses may be able to outspend and overwhelm their competition, but this is an ineffective approach to gaining a competitive advantage. The finest firms in this sector will continuously improve and seek improved methods. Robotic companies will invest profits in research and development, constructing new factories or equipment, and applying for patents.
Pros and Cons of Robotics Stocks
Sector diversity: Investing in robots without committing to a single industry or area is possible. Robotic technologies may assist businesses across several industries and fields, including agriculture, healthcare, and more. Robots can complete whatever tedious work it takes precision and repetition for, wherever they’re required.
Capital intensive: Robotics businesses frequently have to spend significant money to get their solutions into the financial market data. Research must be done, patents must be secured, prototypes must be produced, and manufacturing must be ramped up to meet demand. Once items have been created and distributed, maintaining and updating them becomes more difficult.
Strong growth expectations: The robotics industry is poised for significant development over the next decade, and confidence levels are excellent for investment in an increasingly unpredictable world. According to Statista, the robotics industry will hit $70.6 billion in revenue by 2028.
Potential worker displacement: When a disaster occurs, traditional economies have found ways to compensate, but automation is unique with potentially broader and longer-lasting consequences. Job prospects for individuals with manual skills could be severely harmed automate tasks devices that don’t need to take a break. Worker displacement may have widespread repercussions on the economy.
What is Robotics Investing?
As one of the critical components of the Fourth Industrial Revolution, robotics will disrupt a wide range of industries worldwide.
The Fourth Industrial Revolution will see the rise of artificial intelligence (AI) and robotics, both poised to become essential elements of the revolution. Many sectors around the globe are expected to be disrupted by AI and robotics soon.
According to a study from Allied Markets Research, the worldwide robotics industry is expected to generate US$189.36 billion in revenue by 2027, up from US$62.75 billion in 2019. “The intersection of technology, engineering, and science for generating machines called robots that are used to duplicate human actions is known as robotics technology,” according to the study. The device is used in various economic sectors, including healthcare, agriculture, and manufacturing.
However, it should be noted that experts have widely varied views on the subject of whether robotics will displace jobs or create more employment in the future.
Which Robotics Stocks To Consider?
Intuitive Surgical, a market cap leader in surgical robotics, is the first on this list of top robotics stocks (NASDAQ: ISRG). The team’s technology was the first to be cleared by the US Food and Drug Administration for a minimally invasive surgical system.
Intuitive Surgical offers robotic platforms, including the da Vinci system, to physicians and hospitals. This technique is employed by surgeons in nearly 50 US states and 66 nations worldwide. The firm’s fourth-quarter 2021 revenue was $1.55 billion, up 17 percent from last year’s period.
ABB (NYSE: ABB) is a global power and automation technology firm specializing in machine and factory automation solutions and comprehensive robotics services and applications.
The firm’s new robotics manufacturing and research plant in China are anticipated to open in the second quarter of 2022. China is the world’s largest robotics stock market.
Rockwell Automation (NYSE: ROK) provides industrial automation power, control, and information solutions through two primary businesses: architecture & software and control products and solutions. The first involves the consumer robot company hardware, software, and communication elements of its integrated control and information architecture, whereas the second provides products that monitor control processes and applications.
Teradyne is on the robotic top stocks list, which follows (NASDAQ: TER). With several key acquisitions, including Universal Robots, Energid Technologies, and MiR, this leading provider test equipment manufacturer has expanded its presence in the field. In 2021, Teradyne’s industrial automation unit had sales of US$376 million, up 34% from US$280 million in 2020.
Textron Systems (NYSE: TXT) is a worldwide leader in unmanned air, surface, and land products, services, and support for the aerospace and defense sectors.
Textron is also involved in other projects, including working with Howe & Howe Technologies to create a small advanced ground robotic systems vehicle. It’s got a high-torque, hybrid diesel Emerson electric engine, and tracks built to operate under challenging conditions and tight spaces.
Cognex, a maker of industrial automation tools that use machine-vision technologies to automate applications where vision is required, is a path stock in the field of robotics. Cognex (NASDAQ: CGNX) is an industrial automation company that provides machine-vision products for obtaining and interpreting visual data to automate activities where sight is needed. Cognex is a global provider of machine-vision solutions that execute discrete parts manufacturing and tracking, including mobile phones, pharmaceuticals, and automobile tires.
Cognex teamed up with Cobot Nation, an industrial automation firm, in mid-2021 to combine Cognex’s machine-vision technology with Cobot’s collaborative robots.
AeroVironment (NASDAQ: AVAV) is a technology solutions provider that offers unmanned aircraft systems with a sophisticated portfolio. The company’s battery-powered, hand-launched unmanned aircraft systems are in high demand by the US Department of Defense and its allied military services.
Kespry has been granted a $4 million Department of Defense foreign military sales contract award to supply small unmanned aircraft systems to an overseas country.
How To Invest in Robotics: Robotics ETFs
An alternative to buying a single stock or fund is to invest in exchange-traded funds (ETFs), which are index funds that trade on the open market. ETFs allow investors to diversify their assets across several companies rather than investing in a single company. Currently, two robots ETFs are available to investors, tracking a wide range of businesses.
Robo Global Robotics & Automation ETF (ARCA: ROBO):
The first ETF dedicated to robotics was introduced on October 22, 2013. Global Robotics Industry and automation are two of the fastest-growing industries in the world, and this index is designed to track firms involved in those sectors. To be included, firms must derive a portion of their income from robotics or automation products, processes, services, or devices. The ETF now has 83 shareholders, including iRhythym Technologies (NASDAQ: IRTC) and Brooks Automation (NASDAQ: BRKS), among the fund’s top holdings.
Global X Robotics & Artificial Intelligence ETF (NASDAQ: BOTZ):
This is the second robotics-related ETF, which was introduced on September 12, 2016. According to ETF.com, it provides cross-sector exposure to firms developing and manufacturing robotics and AI digital transformation solutions through a market-cap-based and weighted index. To be considered for the ETF, businesses must derive most of their revenue from robotics or artificial intelligence. NVIDIA and Intuitive Surgical are two segments of its top-weighted holdings.
However, sectors poised for development have a lot of investment potential and tend to experience more competition. Competition may be particularly cutthroat for recently founded firms that don’t have the cash or resources of more established businesses.
And the other significant risk factor associated with robotics stocks plays into the first: high company valuations. It’s no secret that the robotics industry is on an upward trajectory, and the market has adjusted in response. Like many other industries in this sector, robotics stocks can get expensive, resulting from the higher valuations associated with companies in this industry.
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