June 19, 2023
(GM), (ISRG), (ABB), (TER), (YASKY), (FANUY), (AMZN), (BMWYY), (KUKAF)
Here's a fun little fact: The word "robot" originally comes from a play called "Rossum's Universal Robots" written by Karl Capek in 1920. And in the play, the robots take over the world.
Now, despite Hollywood's obsession with robots that want to destroy us all (looking at you, "The Terminator" franchise), robots have actually been peacefully working alongside us humans for a while now.
In fact, General Motors (GM) introduced the first industrial robot, called "The Unimate," back in 1959. It was just a simple hydraulic arm that did some repetitive welding tasks. Seven years later, "The Unimate" made a friendly appearance on The Tonight Show with Johnny Carson, where it played golf.
As technology has improved and become cheaper, robots have become more prevalent. Robot sales in North America have hit record highs for three consecutive quarters. We now encounter robots in our daily lives in various forms: they vacuum floors, mow lawns, make coffee, and even provide companionship.
Are robots going to take over the world? They help combat supply chain disruptions and inflation. Automation allows employees to focus on higher-value tasks and work efficiently. It's not a matter of "robot vs. humans" - we can all be on the team!
As someone who has been watching the markets for decades, I can confidently say that the robotics industry is about to blow up — and I'm not just talking about your Roomba on steroids. This is a massive opportunity for savvy investors to make some big bucks.
Let's take a closer look at the robotics industry itself.
The global robotics market is expected to grow at an impressive CAGR of 23% from 2021 to 2026, eventually hitting a cool $186.7 billion by the end of that span.
The range of robotics applications continues to expand at a dizzying pace, everything from manufacturing to healthcare, logistics to agriculture, and beyond. It's all driven by many factors behind the scenes, like advancements in AI and machine learning, growing demand for automation, and improvements in sensor technologies. No wonder more and more companies are tapping into robotics R&D, and the stock market is definitely taking notice of all this excitement.
One company that is particularly well-positioned to benefit from the growth of robotics is Intuitive Surgical (ISRG).
Intuitive Surgical is a pioneer in the field of robotic surgery, with its flagship da Vinci Surgical System being used in over 7 million surgeries worldwide. The company has a market cap of $125.6 billion, and its stock has been on a tear in recent years, growing by over 800% in the last decade.
At this point, about half of all robotic procedures are used in urological and gynecological procedures, but robotic surgery has applications across the medical field. Currently, only 3% of all surgeries are done robotically, so there is a lot of potential for growth in this area.
Another company that benefits from the growth of robotics is ABB (ABB), a Swiss-Swedish multinational corporation specializing in robotics, power, and automation technology.
ABB has a market cap of $67.2 billion and is a leader in industrial robotics, with applications ranging from welding and painting to packaging and palletizing. The company's robotics division has seen double-digit growth in recent years, and it is well-positioned to capitalize on the continued expansion of the global robotics market.
Of course, the growth of the robotics industry isn't limited to these two companies. Other publicly traded firms that are likely to benefit from this trend include Teradyne (TER), Yaskawa Electric (YASKY), and Fanuc (FANUY), among others.
Another area where robotics is killing it is logistics. As online shopping and same-day delivery become more popular, companies need help to keep up and must find ways to streamline their supply chains and reduce costs.
Robotics play a major role in solving these problems. Autonomous robots can zip around warehouses, grab products off shelves, and even help load and unload trucks.
A company that is leading the charge in this area is Amazon (AMZN).
Amazon has been investing heavily in robotics for years, and its acquisition of Kiva Systems in 2012 has been instrumental in the company's ability to scale its logistics operations. The company now has over 200,000 robots deployed in its warehouses, and it is constantly experimenting with new ways to use robotics to increase efficiency and reduce costs.
An additional reason that robots are becoming more in demand involves the transportation industry.
People keep coming up with state-of-the-art ways to make cars and trucks, and these new production technologies require lots of robots. Moreover, factories worldwide are getting upgrades, so they need a bunch of new-fangled robots to help them step up their game.
In 2020, BMW AG (BMWYY) and industrial robots and systems manufacturer KUKA (KUKAF) signed a deal to provide more than 5,000 robots to new production lines and factories worldwide. KUKA stated that these industrial robots would be utilized globally at the BMW Group's overseas manufacturing facilities to produce present and future vehicle models.
Industrial robot costs have become much more reasonable over the past thirty years. In fact, it has significantly dropped by an average of 50%. This nifty decrease makes adopting robotics technology in various industries a feasible option.
And even though wages are high, installing new robots doesn’t break the bank for companies. They're not replacing factory workers. Instead, they're working alongside their human counterparts to free up their time for more critical tasks. The Institute for Operations Research and the Management Sciences backs the idea that investments in robotics technology equaled firm employment.
It’s incredible that after a century since the word "robot" was first used, advancements in technology, novel applications, and economic and demographic factors are making once far-fetched sci-fi concepts a reality.
Needless to say, the potential for investors to strike it rich in the robotics space is undeniable.
In the wise words of Warren Buffett, "Opportunities come infrequently. When it rains gold, put out the bucket, not the thimble." And my friends, the robotics industry is a downpour of golden opportunities.
While the growth of robotics may lead to job displacement in some sectors, it's important to remember that this is a natural evolution of technology. As new jobs are created in various areas, such as robotics engineering and data analysis, we must adapt and embrace these changes.
In the meantime, savvy investors can capitalize on the continued expansion of the robotics market. Companies such as Intuitive Surgical, ABB, and Amazon are just a few examples of publicly traded firms well-positioned to benefit from this trend.
However, let's remember that the robotics industry is still in its early stages, and there are bound to be new players emerging in the coming years.
As with any investment, it's essential to do your due diligence and invest wisely. But the rewards could be massive for those willing to take the risk. So put out the bucket, my friends, and get ready to catch some of that golden rain.
Midjourney prompt: “Robot at the grocery store doing your shopping, photorealistic”
