Early futures action shows stocks ending the week under severe pressure. And once again it appears to be concerns about valuations attached to the artificial intelligence build-out that are doing the damage, with the semiconductor sector leading the retreat.
Rotating away from erstwhile AI darlings has been in vogue of late. Defensive plays like consumer staples and healthcare are becoming more popular again. Bank stocks have benefited from a batch of good earnings.
But according to research firm Bespoke Investment Group, there’s an AI-adjacent theme that investors should be considering right now: robotics.
In a note that published Thursday, Bespoke observes that interest in the sector is building fast. “Google search terms for robotics and related terms including components have begun to rise exponentially in the past year, and especially in the past few months,” they say.
The focus comes as consumers and investors hear much more about robotics, such as news of Tesla pivoting a factory toward the production of its Optimus robot, and the unveiling of household products such as 1x’s NEO servant.
Source: Bespoke Investment
“Apart from the flashiness of humanoid robots, the growth in robotics thanks in part to AI developments has been material,” says the firm. It notes that Japanese machine orders for industrial robots have grown 24.5% in the past year — one of the fastest increases on record.
Companies are jostling to take stakes in the robotics sector. For example, this week Japan’s Hyundai Motor said it would purchase SoftBank’s stake in Boston Dynamics, the U.S. group famous for videos of somewhat freaky robot dogs.
Bespoke splits the robotics theme into two baskets; one for firms with actual robotics or automation products as lines of business, and alternatively picks-and-shovels companies who produce critical components or systems.
Source: Bespoke Investment.
To be included in the baskets, the stocks must have market capitalizations of more than $1 billion and trade with liquid U.S. listings. The equal-weighted baskets have done well year-over-year, though the robotics and automation company basket has pulled back this year.
Bespoke accepts that its baskets don’t include a large number of companies that are involved with robotics on Chinese, South Korean, or Japanese exchanges.
The two cohorts are too big to list here in full, but here’s the top 10 by market cap in the Bespoke Robotics & Automation Basket:
Robotic-arm orthopaedic surgery systems | Ticker | Robotics |
Alphabet | GOOGL | Waymo robotaxi and robotics AI research |
Amazon | AMZN | Operates over 1 million warehouse robots |
Tesla | TSLA | Developing Optimus humanoid robot |
ABB | ABBNY | Global industrial robot and automation maker |
Deere | DE | Autonomous tractors and farm equipment |
Intuitive Surg. | ISRG | Makes da Vinci robotic surgical systems. |
Stryker | SYK | Robotic-arm orthopedic surgery systems |
Medtronic | MDT | Hugo and Mazor surgical robot systems. |
Honeywell | HON | Warehouse automation and robotics systems |
Teradyne | TER | Universal Robots cobots and MiR mobile robot |
And here’s the top 10 by market cap of the Robotics & Automation Picks & Shovels Basket:
Company | Ticker | Robotics |
Nvidia | NVDA | Leading robotics compute and software |
AMD | AMD | Compute chips used in robotics, edge AI |
Texas Ins. | TXN | Chips for factory automation motor control |
Siemens | SIEGY | Factory automation and robotics control |
Qualcomm | QCOM | Makes edge-AI chips for robots and drones. |
Analog Devices | ADI | Sensing chips for industrial robot motion. |
Schneider Elec. | SBGSY | Lexium robotics and automation components |
Parker-Hannifin | PH | Actuation, hydraulics for automation, robotics |
Infineon | IFNNY | Supplies power chips for robot motor control |
Emerson Elec. | EMR | Process, discrete automation control systems |
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