Now might be a great time for investors to consider scooping up shares of these robotics stocks. I think that although in the short-term these technologies will be a slow burn in terms of improving company productivity, the tech stack of artificial intelligence (AI), machine learning, and the Internet of Things (IoT), will all contribute meaningfully to company revenue over the next decade.
Industry forecasts anticipate the market reaching a huge sum of $34.64 billion by 2031. However, on balance, not everything is good news for companies in this space. High initial costs deter many potential adopters, investors should keep this in mind as AI capital expenditures reach north of $1 trillion. Furthermore, a lack of experience with advanced automation poses integration difficulties, which means there are significant execution risks for companies that are experimenting with scaling their robotics technologies.
Still, I think that the upside for these stocks is not yet fully priced in or reflected in their stock prices, thus giving investors many opportunities to participate in a potential bull run.
Here are three companies for investors to consider.
Intuitive Surgical (ISRG)
Intuitive Surgical (NASDAQ:ISRG) is one of my favorite robotics stocks for investors to consider. It has a formidable market presence in the robotic surgery segment. Unlike some of its newer entrants, its machines can be seen mostly in hospitals, while others are specializing in Ambulatory surgery centers (ASCs). This gives the company an inbuilt competitive advantage and moat as the switching costs are very high for changing between different machines. I feel that this advantage is sustainable long-term thanks to its being one of the first companies to commercialize robotics for use in surgery.
ISRG recent financials also suggest it could be a strong stock for investors to consider. The firm reported Q2 adjusted EPS of $1.78, up 25% year-over-year, beating its $1.54 estimate. Also, it had revenue of $2.01 billion, up 14%, surpassing its $1.97 billion forecast. The future looks accretive as it continues to roll out new installations despite its solid customer base.
Rockwell Automation (ROK)
Rockwell Automation (NYSE:ROK) is a global leader in industrial automation. It’s one of the few companies that have strong momentum behind it while others like ISRG are expected to grow more slowly.
However, ROK’s smaller market presence means its earnings and revenues oscillate more than other firms. For instance, last quarter reported organic sales decreased by 8.4% year-over-year and adjusted EPS was $2.71, down 10%.
However, I am still bullish on ROK’s future prospects. As we all know, we are going through some cyclical wobbles at present with lower consumer demand and confidence. As a business that depends strongly on the business cycle, ROK could be near or at the bottom of its downturn. When economic conditions improve, I think there’s a strong chance that it will make a bullish recovery, as shares have lost 17.42% of their value year-to-date. Investors could then snatch up one of these robotics stocks at a bargain.
UiPath (PATH)
UiPath (NYSE:PATH) contrasts sharply with ROK stock as it posted some impressive financials recently. Revenue was $335 million, up 16% year-over-year. Meanwhile, Annual Recurring Revenue (ARR) reached $1.508 billion, up 21% year-over-year.
The firm’s outlook also looks solid according to Ashim Gupta, UiPath Chief Financial Officer. “While our revenue and operating margin guidance are impacted by contract timing and duration, we have confidence in our ability to generate durable ARR growth at scale, and meaningful non-GAAP adjusted free cash flow.”
A focus on ARR growth is key for PATH’s future profitability. It allows firms to durably scale their revenue and earnings, along with providing clear visibility into the company’s future revenue and earnings.
PATH expanded its partnership with Microsoft (NASDAQ:MSFT) during the quarter, through integration with Copilot for Microsoft 365. It also unveiled a new family of Large Language Models (LLMs) at the AI Summit. All of these are great tailwinds that I think will benefit the company immensely in the future.
On the date of publication, Matthew Farley did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or
indirectly) any positions in the securities mentioned in this article.