It’s no secret that the robotics industry is transforming the global economy. Here’s a brief overview of how to invest in this growing market.
The robotics industry is one of the most vast markets in the technology sector today–with its applications used in industries such as medical device, automotive, industrial, cloud, agriculture, and automation, to name a few–so much so that a “robot revolution” will completely change the global economy over the next 20 years or so.
In simple terms, robotics is defined as the “science and technology behind the design, manufacturing and application of robots”–which are devices that can perform tasks, the same way people do, but without the assistance of human interaction.
That said, it should come as no surprise that this market has risen in popularity over the last several years–and that its future outlook is a force to be reckoned with. As such, here the Investing News Network (INN) provides a brief overview of the sector, and how to invest in robotics.
How to invest in robotics: global robotics market overview
To provide a little bit of a background and how much this sector has grown in the last few years, the global robotics market was worth roughly $71 billion in 2015, according to International Data Corporation. At the time, the firm projected worldwide spending on robotics and other related services would reach roughly $135 million by 2019, representing a compound annual growth rate (CAGR) of 17 percent.
On the other hand, Research and Markets released a report earlier in 2017 called the “Robotics Market Forecasts: Consumer Robots, Enterprise Robots, Industrial Robots, Healthcare Robots, Military Robots, Unmanned Aerial Vehicles and Autonomous Vehicles,” stating that the global robotics sector will grow from its predictions of $34.1 billion in 2016 to $226.2 billion by 2021–which is a CAGR of a whopping 46 percent.
“The robotics market is undergoing a major transformation in which robots are growing beyond the workhorses of industrial shop floors and beginning to assume the roles of personal assistants, delivery vehicles, surgical assistants, exoskeletons, and unmanned aerial vehicles,” the report said. “Until now, industrial robots have made up more than 50 percent of overall robotics market revenue, however 2016 marks one of the critical turning points of this shift int he robotics market.”
According to the report, it projects that industrial robots will drop to 41 percent of robotics revenue, while the remainder will come from non-industrial robots, such as consumer robots, enterprise robots, military robots, and unmanned aerial vehicles.
Similarly, in terms of the number of the actual number of robotics entering the market, the International Federation of Robotics released a World Robotics Report 2016 in September 2016, highlighting that more than 1.4 million industrial robots will be installed all around the world by 2019, growing at a compound annual growth rate of 13 percent between 2017 and 2019.
How to invest in robotics: stocks and ETFs
Much like other industries, there’s more than one way to invest in the “robotics revolution,” ranging from a variety of stocks and ETFs.
Stocks are generally the more popular route to take when it comes to investment opportunities, and there’s certainly no shortage of them to choose from in the robotics sector, including:
- Cognex (NASDAQ:CGNX): Cognex provides machine vision products that obtain and analyze visual information in order to automate tasks where vision is needed. Cognex also operates through machine vision technologies, which are used to automate the manufacturing and tracking of discrete items, including mobile phones, medications, and automobile tires.
- iRobot (NASDAQ:IRBT): As its name suggests, iRobot is a consumer robot company that designs and build robots. Its portfolio includes concepts in mapping, navigation, mobility and artificial intelligence, while it is also famously known for creating the Roomba, which is a floor vacuuming robot.
- Mazor Robotics (NASDAQ:MZOR): Mazor Robotics is a medical device company that develops computerized and imaging-based systems in the field of spine surgery. The company’s Renaissance Surgical Guidance System allows surgeons to move from freehand surgical procedures to guided procedures. Mazor Robotics also developed the Renaissance Brain Module, which provides control over inserting surgical instruments during brain surgery.
- Rewalk Robotics (NASDAQ:RWLK): Rewalk Robotics is another medical device company, which works to design, develop, and commercialize exoskeletons that allow people with mobility impairments the ability to stand and walk.
- Rockwell Automation (NYSE:ROK): This company provides industrial automation power, control and information solutions through two segments: Architecture & Software and Control Products & Solutions. The former has various hardware, software and communication components of Rockwell’s integrated control and information architecture, while the latter has a range of products that perform multiple control disciplines and monitoring of applications.
For investors who would rather put their money into a sector as a whole rather than a single company, ETFs are generally the way to go. As such, there are currently two robotics ETFs for investors to choose from that track a variety of savvy companies in the industry.
- Robo Global Robotics & Automation ETF (NASDAQ:ROBO): This ETF was the first robotics ETF to launch, with its inception date of October 22, 2013. According to its website, the Robo Global Robotics ETF tracks companies involved in the robotics and automation industry. To be included on the index, companies must receive a portion of their revenue from robotics and automation products, processes, services or devices. The ETF currently holds 91 companies, with its top publicly traded being iRobot (NASDAQ:IRBT).
Global X Robotics & Artificial Intelligence ETF (NASDAQ:BOTZ): Global X Robotics is the second robotics-related ETF, which launched on September 12, 2016. ETF.com states the index provides “cross-sector” exposure to companies that are working on developing and producing robotics and artificial intelligence through a market-cap selected and weighted index. To be considered for the ETF, companies must earn a large portion of their revenue from robotics or artificial intelligence. Out of its holdings, Nvidia (NASDAQ:NVDA) is its top weighted holding.
In sum, the robotics industry isn’t going anywhere any time soon and, as previously mentioned, there’s a wealth of investment going into the sector in the coming years. Putting it simply, it will be an attractive space for investors for many years to come.
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This is an update to an article originally published in 2017.
Securities Disclosure: I, Jocelyn Aspa, hold no direct investment interest in any company mentioned in this article.