Though it’s off its highs of the year, the Global X Robotics & Artificial Intelligence Thematic ETF (NasdaqGM: BOTZ) has recently been mostly steady in the face of some weak industrial economic data reports.
BOTZ “seeks to invest in companies that potentially stand to benefit from increased adoption and utilization of robotics and artificial intelligence (AI), including those involved with industrial robotics and automation, non-industrial robots, and autonomous vehicles,” according to Global X.
Robotics and artificial intelligence are making machines smarter and more capable than ever before, allowing robots to take on increasingly sophisticated tasks for faster and more accurate production. Several sub-groups of artificial intelligence and robotics spaces could be major drivers of the themes’ returns in the coming years, including industrial robots.
Industrial robots are a marquee area of growth for the sector with recent data points confirming as much.
“The industrial robotics market grew a healthy 6% year-over-year in 2018, according to the International Federation of Robotics’ (IFR) annual report,” said Global X in a recent note. “The 422,000 industrial robots sold came despite cyclical weakness in historically important end-markets for the robotics industry, including automotive and consumer electronics.”
Bank On BOTZ
Rising corporate and government security needs also bode well for various artificial intelligence applications and advancements in AI are expected to speed adoption of robotics.
Currently, industrial robots represent a small slice, by some estimates just 1%, of overall industrial spending, implying a significant runway for growth in the years ahead.
“Above-average growth from the U.S., Germany, and Japan helped propel sales,” according to Global X. “New to the IFR’s report were data on collaborative robots or cobots. The14,000 units sold, or 3% of total industrial installations, suggest that this nascent vertical could grow significantly faster than the overall industry.”
Importantly, investors don’t have to pay up for the sales growth associated with BOTZ. Using sales-based metrics, investors will find that BOTZ, though it’s a growth product, is attractively valued. The fund’s price-to-sales-growth and enterprise-value-to-sales-growth ratios of 0.20x and 0.21x are below the comparable metrics on the S&P 500.
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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.