The Robots Aren’t Just Coming … the Robots Are Here!
 |
| By Sean Brodrick |
The words “artificial intelligence” seem to be on every investor’s lips lately. I am betting that 2024 will see a surge in AI.
And this has implications for all sorts of industries. Robotics is one of the industries that AI is going to shift into higher gear.
Robotics are already in a big uptrend. Here’s a chart of installed industrial robots through 2022, the latest full year available. According to the International Federation of Robotics, industrial robot installations hit a new record in 2022, with 553,052 units.
Nearly 4 million industrial robots were in use by the end of 2022.
But nothing, not even a trend, goes in a straight line. And sure enough, robot sales started to slow down last year. Altogether, sales in the U.S. robotics market dropped 29% in the first half of 2023. We don’t know how the rest of the year went yet, but many robotics stocks corrected as a result.
Brother, that is an opportunity. Because this dip is just a correction to the big bullish trend. Analysts at RationalStat expect the global industrial robotics market to grow at a compound annual growth rate of 12.8% between 2023 and 2030! And AI is going to accelerate that trend.
There are multiple reasons why. The one we’re going to talk about today is that AI makes using robots SO much easier.
Here’s a video from Agility Robotics about one of its droids that uses AI. The robot, named Digit, uses a large language model, or LLM — the same kind of artificial intelligence that powers ChatGPT — to interpret verbal commands.
As you can see, a human gives Digit the command, “Clean up this mess.” There’s no code in the robot that Digit should pick things up, but the LLM hears the command and interprets what actions might satisfy it.
AI in robots is just getting started. Within the next few years, we’ll see just how fast the next generation of this robot can clean up the mess or any task a human gives it for that matter. And you won’t need to be a computer programmer to do it!
From Farms to Oil Fields
There are plenty of ways that robots are already making themselves useful in various industries. Let me give you two examples.
First, Chipotle is investing in autonomous farming robots. That’s right, Chipotle Mexican Grill (CMG)!
It invested in a company called Greenfield Robotics. And Greenfield is building fleets of autonomous, lightweight robots designed to remove weeds between rows of crops, day and night. So, that means farmers use less weedkiller, so the robots can pay for themselves over time, and there’s less poison in our food. That sounds like a win-win to me.
Second, an industry that robots are already transforming is energy production. Back in 2021, Rystad Energy forecast that robots could replace hundreds of thousands of oil and gas jobs globally and reduce drilling labor costs by several billion dollars by 2030. Well, each year that goes by proves Rystad more and more correct.
But it’s not like jobs in the oil fields go away. Robots mean fewer undereducated roughnecks and more college-educated folks to monitor the robots and analyze data.
Anson Fernandes, oil and gas analyst at GlobalData, told the Journal of Petroleum Technology:
“A huge number of robots are now being deployed in oil and gas operations, including terrestrial crawlers, quadrupeds, aerial drones, autonomous underwater vehicles and remotely operated vehicles.
“According to GlobalData forecasts, it [robotics] was worth $52.9 billion in 2021 and will reach $568 billion by 2030, recording a compound annual growth rate of 30%. Robots will be the industry’s growth engine, and the oil and gas sector will greatly benefit from emerging use cases.”
If you want to play the trend in robotics, an easy way is the Robo Global Robotics and Automation Index ETF (ROBO). It has an expense ratio of 0.95%. It pulled back recently, but the big uptrend is clear.
It sure looks like ROBO is trending higher. I expect it to test overhead resistance around $60 and then go back to its old high above $70 … and potentially much higher from there.
The robots aren’t only coming … they are already here. And you can make a pile of money.
All the best,
Sean
