In robotics & AI, now is the time to dive in and buy the weakness
The market may have taken a turn, but in the world of robotics and AI, the future remains glaringly bright. That’s great news for those already invested in what has been called the greatest investment opportunity of our generation. It may be even better news for investors who have been sitting on the sidelines waiting for the ideal time to dive in.
Of course, even though it was widely anticipated, the latest dramatic dip in the market could easily cause even the most dedicated, long-term investor to take pause. And yet, with a little perspective, it’s just as easy to see why now may be the best time in a long time to take the plunge. A quick look in the rear-view mirror is all that’s needed to see how the robotics and AI market has gotten to where it is today—and where it’s most likely headed in the future.
To provide that view, the ROBO Global Robotics & Automation Index offers the perfect snapshot of this exciting market segment. The first index created to capture the global opportunity of robotics, automation, and AI (or RAAI), the ROBO index includes companies across the entire RAAI supply chain. Rather than targeting only the hugely over-owned large-cap leaders, the index is designed to contain a diversified mix of market caps, including 28% large-caps, 49% mid-caps, and 23% small-caps. Here’s just a quick peek at where a few of these ROBO Global index members are this week compared to two years ago, in November 2016:
- Intuitive Surgical was trading at 223, compared to ~468 today.
- Global Unichip was trading at 76 compared to ~188 today.
- Zebra Technologies was trading at 63 compared to ~153 today.
- Aerovironment was trading at 24 compared to ~85 today.
- Mazor Robotics was trading at 21 compared to ~58 today.
- Isra Vision AG was trading at 18 euro compared to ~37 euro today.
What’s most important to note is that each of these companies is continuing to provide investors with significant ROI, despite that fact that they are currently swimming in a down market. While this week’s numbers are markedly lower than what we saw just a few weeks ago, they are still dream numbers for investors who dove in to the index just 24 months ago.
Equally impressive is the fact that more than 60% of the companies in the index have net cash positions. These aren’t fly-by-night companies who are subsisting on inflows of VC funds with the mere hope of becoming profitable in the future. They are some of the world’s most innovative companies who are delivering on the incredible promise of robotics and AI. These are the makers of the technologies and applications that are enabling today’s robotics revolution, and they are delivering the products and solutions that are being put to work now to transform nearly every industry in every region around the world.
Still, the ROBO index has seen a dramatic pullback in the past few weeks. Consistent with the general market downturn, October 2018 has delivered the worst pullback in ROBO history at about 15%. Even so, while not every index member has doubled or tripled in price in the last 24 months, many have. And regardless of the cyclical ups and downs of the market, the capabilities of robotics, automation, and AI are continuing to skyrocket. Of that, there is no doubt.
Just look at these indicators of what’s to come in robotics and AI:
- In just 5 years, as many as 5 Billion people will have access to the Internet, adding nearly 2 Billion new consumers, new app developers, and new innovators to the already vast population of users.
- Robotics, automation, and AI companies are growing at 2, 3, and 4 times the pace of the general market.
- Robots and cobots are now a competitive requirement for manufacturers, driving global sales of industrial robots to a record 387,000 units in 2017—an increase of 31% compared to 2016.
- In China alone, demand for industrial robots was up 58% in 2017.
- The UK recently launched an industry strategy that relies heavily on AI to help generate an estimated £232 billion for the UK economy by 2030.
- In 2018, Canadian Manufacturers & Exporters (CME) launched ‘Industrie 2030’ with the goal of doubling the value-added manufacturing, processing, technology and services in Canada by 2030.
- More than 20 other countries have released an aggressive AI strategy or action plan in an effort to create or maintain their ability to compete in an increasingly AI-driven world.
No one can control the market. But what we can do is invest in companies and global trajectories that are positioned for growth—regardless of which way the market turns. Without a doubt, today’s most promising investment opportunity is robotics and AI.
At ROBO Global, our focus is not on the cyclical shifts of the market in general, but on the potential of robotics and AI companies as we look 5, 10, and even 20 years in the future. That’s why we rely on our Strategic Advisory Board, which includes some of today’s most esteemed researchers, teachers, and leaders in the field. That’s why we focus not on market cap, but on innovation and productivity. And that’s why our 5-year track record of real data and real results simply can’t be matched. We have seen that slow and steady truly does win the race. For investors who are seeking long-term growth and who are ready to buy the weakness offered by a waning market, the time to dive into robotics and AI is now.
By Bill Studebaker, President & CIO, ROBO Global
 According to the International Federation of Robotics, June 20, 2018.
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