What is robotic investment?

In the coming decades, investing in robotics and the rising use of automation will be one of the most exciting options for stock buyers. Manufacturers of robotics and automation systems have realized a growing need to improve manufacturing efficiency in several sectors of the economy. The already well-established robotics industry is entering a new phase of long-term expansion due to the rising use of information technology in manufacturing and the Industrial Internet of Things (IIoT) boom, which should motivate many businesses to take action. Not long ago, robots seemed like a technology from the distant future. Today, however, they are all around us, from warehouses and construction sites to hospitals and shopping malls. Investment in robotics is pouring in: last year, start-ups in the field received more than $17 billion, three times more than in 2020. In 2022, the volume of investments decreased slightly compared to last year, but the sector still attracted more than $5 billion. For many years, companies in this field are no longer specialized, and interest in them has increased. Now, robotics isn't just attracting investors focused on cutting-edge technology: in April, Amazon announced its $1 billion Amazon Industrial Innovation Fund, which invests in companies from fields such as customer fulfillment, logistics, and supply chain organization.

Why Invest in Robots?

The rise in popularity is due to several factors.

  1. justifying the promise.

Technology is improving; components that didn't exist two years ago are now available.

  1. Habituation with robots.

If working side by side with an autonomous machine seemed like a strange phenomenon, many have now gotten used to the idea. The advent of autonomous cars has dramatically contributed to this.

  1. Coronavirus.

Many have started investing in companies developing robots for hospitals and health care. The coronavirus pandemic showed the need for such technology when nurses were overworked, and workers had to keep their distance.

The robot will be a human assistant, not a human replacement

Industry representatives emphasize that they do not seek to take jobs away from humans. Robots free nurses and other health care workers from more mundane tasks to focus on essential duties.

  1. Software development will attract the next wave of investment. The software layer will help manage and train robots to expand their duties and change the workforce.

Investing in robotics is a cyclical state

Robotics and manufacturing automation has some characteristics we should note from the outset.

First, spending in the industry tends to depend on what the business community calls expansion or capital spending growth, which is different from the maintenance of capital expenditures. In other words, when the economy is robust, and sales are rising, manufacturing businesses prefer to consider enlarging their facilities or deploying new technologies. It is an expansion and capital spending growth. Maintenance of capital expenditures is simply what companies must spend to maintain current production levels. Investors will therefore have to put up with the ups and downs because economies frequently experience them, even if the long-term trend toward robotics automation spending takes a positive vector.

Second, industrial automation is a subset of robotics, and it is frequently difficult to distinguish between the two in terms of investment. It is unlikely that a company dependent on industrial automation can avoid a downturn in the economy, even if robotics sales are growing.

Long-term investors in the industry will have to accept that there will be ups and downs, but the underlying drivers will remain strong.

The third point is that the demand for robotics and automation is rising, particularly in Asia (and China, in particular). The number of robotic devices has twice in the ten years since the last annual fall in global exports in 2012, according to the International Federation of Robotics (IFR).

In this regard, it is worth noting that automation/robotics start-ups such as the automotive, electrical, and electronics industries will soon lead the way in growth. It is essential to keep this in mind because if these two industries shrink aggressively - as they did in 2019 - robotics automation companies could suffer a drop in sales.

In general, if you invest in the robotics industry, you should be aware of its cyclical nature and considerable ties to China. Industrial automation will almost certainly impact acquisitions in the robotics sector.

Investing in Autonomous Vehicles

Investing in future automobile technology is one of the most recent trends that has grown in popularity. Automotive corporations have invested billions of dollars in the race to win maximum market share, which will become enormous for electric cars and autonomous vehicles in the next ten years. Total global investment in autonomous vehicle technology already exceeds $200 billion, a figure that will increase as competition intensifies. At the same time, countries worldwide are investing in infrastructure to facilitate the production and adoption of such vehicles. It won't be long before commercial fleets switch to new technologies. Any impact on the logistics industry will create a domino effect that will change retail, commerce, and, ultimately, all aspects of our lives. Self-driving cars will have the same impact on the automotive industry as the smartphone has had on telecommunications: massive and unpredictable. Current research on autonomous vehicles has mainly focused on mobility offerings as a service. These are driverless fleets, like Uber, where a car can be summoned at the touch of a button. They would be much more economical since there is no need to pay drivers' salaries. The proliferation of such options could lead to fewer private car owners, affecting everything from fuel prices to insurance and government revenue structures.

Investing in Industrial Robotics

Presumably, the number of sales of robotic systems, after booming in 2021, may decline slightly in 2022. Overall, global growth will be around 6% by 2024.

Government stimulus programs and high growth in chips and components will drive growth. The sector will also benefit from the transition to fully digital production - from order acceptance to delivery.

The leading technologies that will enable the industrial robot market to grow are:

  • Cloud computing, 5G networks, new machine vision, and artificial intelligence;
  • The proliferation of ESG and the adoption of robots in many stages of manufacturing;
  • The shift to robotic manufacturing helps reduce scrap rates.

Investing in Healthcare Robotics

The medical robot market consists of robots that are used to perform a variety of complex medical tasks. The main application of this technology in the medical industry is surgery. Due to their high precision, robotic systems help perform specific surgical procedures. These include heart and back surgeries, gynecological surgeries, and transplant surgeries.

However, many other applications of robots in medicine are still being studied and discovered. Among them are "telepresence" robots, which can help examine and treat patients in rural areas; rehabilitation robots, which can help people recover from disabilities or accidents; medical transport robots, which can deliver consumables, medicine, and food to staff and patients.

Medical Robot Industry Growth Forecasts

The market analysis study predicts that the high growth rate of the medical robots market will continue over the next few years. The global medical robot industry will grow at a compound annual growth rate (CAGR) of 12.21% from 2021 to 2026, which is significant.

The value of the worldwide medical robot market will expand by around $5 billion by the end of the forecast period. The report predicts that the industry's overall market growth will reach 123% in just five years.

Investing in Robots for Consumers

A promising direction is investing in robots for consumers. For example, the development of "smart" space - from the "thinking" house to the city - has been popular in recent years. Already, Sidewalk Labs, a division of Alphabet (which includes Google), is developing a "smart" city equipped with millions of sensors that collect information about air purity, movements of city residents, car traffic, and so on. In turn, "smart" houses have already become a reality to a large extent. Many large corporations have such developments. The topic of the intelligent home is directly related to the development of voice assistants, although the scope of their application is broader. Another popular trend is fintech, as banks and other financial companies are increasingly implementing artificial intelligence. We are talking about computer-assisted client counseling, assessment of borrower's solvency using artificial intelligence, and robotized asset portfolio management and investment decision-making. According to rating agency Moody's, last year, the number of assets managed by robot advisors in the U.S. doubled to $200 billion. AI also helps banks increase personalization - based on analysis of the individual financial behavior of a particular customer, the appropriate advertising or offers for him. Other companies, including retailers, are also using artificial intelligence to analyze big data and assess consumer behavior.