2023-10-27 10:41:04 ET
Summary
- Recent advancements in artificial intelligence have started to realize the long-held potential of the sector.
- AI advancements are expected to ignite the potential of the robotics industry, leading to the development of AI-powered robots.
- Symbotic, a robotics company specializing in warehouse logistics, has successfully integrated AI with robotics and has seen significant growth in its shares since going public.
By Andrew Prochnow
While it's only the beginning, recent advancements in the realm of artificial intelligence ((AI)) have started to realize certain aspects of the sector's long-held potential.
ChatGPT has been so popular that most estimates indicate it's the fastest-growing application in history . The skyrocketing valuation of ChatGPT's parent-OpenAI-shows how the longtime potential of artificial intelligence has become today's reality.
Given the intricacies of this particular field, it's challenging to predict the future of AI. However, it's not difficult to envision that recent AI advancements will ignite the potential of the robotics industry.
For decades, science fiction has captivated millions across the globe, and now one of its key concepts - AI-powered robots - may soon transition into reality. In the not-so-distant future, a real-world counterpart of a Star Wars robot, such as R2-D2 or C-3PO, might be guiding tours at Hollywood Studios.
Looking further ahead, it's conceivable that robots and androids could venture into outer space, representing humanity, akin to what the Blade Runner franchise envisions. The current Mars rovers serve as an early example of this concept.
Considering this incredible potential, the successful fusion of artificial intelligence and robotics could potentially stand as one of the most remarkable technological achievements in human civilization's history. This is because AI-equipped robots and androids have the capacity to progressively enhance their task execution. Through various sensors, they can gather real-time data and make instantaneous adjustments and decisions.
The integration of AI essentially transforms these robots into "smart" entities capable of solving problems as they arise. At this stage, the robot or android is not merely following predefined instructions; it is autonomously resolving issues based on its training data, prior experiences, and trial-and-error learning.
Much like the creative visions of the early pioneers who conceived these "sentient" machines, the possibilities appear boundless.
Countless robots have already been deployed across a multitude of industries.
In the present day, most developments in robotics remain largely unnoticed by the average person. Apart from household robots like the Roomba, the general population seldom encounters robots in their daily lives.
However, that doesn't mean the sector hasn't been advancing. Today, it's estimated that more than a million robots are currently deployed at factories in the global automotive industry.
This constitutes the most significant concentration of robots within any single industry sector, accounting for approximately one-third of the overall global robot deployment across various industries. The diagram below showcases the countries with the greatest proportions of robot workers to human workers in the automotive manufacturing sector.
Within the automotive sector, the predominant robot employed is referred to as an "articulated robot arm." These robots serve multiple functions in the manufacturing process, encompassing tasks like assembly, welding, and finishing.
Besides articulated arms, the automobile industry makes use of Delta robots, Cartesian robots, collaborative robots (cobots), and Selective Compliance Assembly Robot Arms (SCARA robots).
Extending beyond the automotive sector, robots are frequently deployed in various other industrial manufacturing domains such as electronics, plastics, and chemicals. They are also prevalent in commercial farming, logistics, and warehousing operations. Additionally, robots are commonly found in the medical field, particularly in surgical assistance applications.
What Sets Symbotic (SYM) Apart in the Robotics Sector Right Now
The world's first pure robotics company-Unimation-was founded back in 1962 by Joseph F. Engelberger and George Devol in the United States. Unimation successfully commercialized the earliest robots used in the automotive industry, which were tasked with lifting, stacking, casting and welding.
The first Unimation robots were installed at a General Motors factory in New Jersey during the early 1960s. However, companies such as Chrysler, Ford and Fiat quickly followed suit.
Unimation was ultimately acquired by Westinghouse, which was also an early pioneer in the field. In 1926, engineers at Westinghouse developed the robot "Televox," which was a telephone-operated industrial switching machine-believed to be one of the earliest robots ever put to commercial use.
According to reports from that period , Televox could "regulate the flow of gas, water or electricity in factories or utility plants by instructing electrical relays to open or close in specific sequences. Before this time, a human switch operator had to be present at each step."
Today, one of the best-known robotics companies is iRobot (IRBT), which developed the first robot vacuum-the Roomba. The company was founded in 1990 by three members of the MIT Artificial Intelligence Lab. To date, iRobot has sold roughly 30 million home-use robots.
In August of 2022, Amazon (AMZN) announced it would acquire iRobot for $1.7 billion. However, the deal has not yet been cleared by global regulators, and Amazon has since reduced its bid to $1.4 billion.
Some of the other well-known companies operating in the robotics sector are highlighted below (sorted by year-to-date return):
- Symbotic, +240%
- Nvidia ( NVDA ), +200%
- Tesla ( TSLA ), +96%
- PTC Inc. ( PTC ), +14%
- ABB (ABBNY), +9%
- Stryker Corp ( SYK ), +7%
- Teradyne ( TER ), +6%
- Intuitive Surgical ( ISRG ), +3%
- Rockwell Automation ( ROK ), +2%
- Emerson Electric ( EMR ), -6%
- Thermo Fisher Scientific ( TMO ), -17%
- Zebra Technologies ( ZBRA ), -21%
- Ambarella ( AMBA ), -39%
Regrettably, among the stocks mentioned earlier, several belong to large-cap corporations. Consequently, the robotics divisions of these companies constitute only a fraction of their overall activities. A prime example of this situation is Tesla, which is in the process of creating a robotic humanoid referred to as "Optimus" (also known as the Tesla Bot).
Nvidia is also included on the list because it has developed the most advanced AI chips and software on the market, which makes it a natural partner for any cutting-edge robotics company. Intuitive Surgical represents somewhat of a pure play on robotics, because the company was an early pioneer of robot-assisted surgeries, and could offer significant future potential if it successfully integrates AI into its products and services.
Of the companies listed above, one of the most intriguing is Symbiotic , which has seen its shares skyrocket in 2023. Symbotic operates in a red-hot niche of robotics-warehouse logistics. Symbotic went public last year via a special purpose acquisition company (SPAC) and has seen its shares rally by roughly 290% since that time.
Symbotic created an end-to-end warehouse management platform that integrates both AI software and robotics. The company has already sold its platform to retailing giants such as Albertsons ( ACI ), Target ( TGT ) and Walmart ( WMT ), and recently partnered with SoftBank (SFTBY) on a joint venture known as "GreenBox Systems."
Through this initiative, SoftBank and Symbotic intend to deliver AI-powered logistics and warehousing solutions to smaller companies. Softbank reportedly owns around 8% of Symbotic, and 65% of the GreenBox Systems joint venture.
Walmart also holds a stake in Symbotic, which was negotiated when Walmart first agreed to deploy the Symbotic warehousing platform across 42 of its regional distribution centers focused on packaged consumer goods. That stake was recently estimated to represent about 11% of Symbotic, according to a recent proxy statement released by the emerging robotics company.
Symbotic has previously boasted that its platform "enables companies to move goods with unmatched speed, agility, accuracy and efficiency." Considering the company's list of existing customers, and the fact that it convinced SoftBank to partner on the GreenBox initiative, the future looks bright for one of the few companies that appears to have already successfully integrated AI with robotics.
According to Nasdaq , Symbotic's consensus analyst rating at this time is "strong buy," with an average price target of $53.38. Those price targets range between $35/share and $70/share. In comparison, TipRanks.com indicates that Symbotic shares are a "moderate buy," with 7 analysts rating the stock a "buy" and three rating it a "hold." Seeking Alpha analysts also offer a "hold" rating in aggregate.
Those ratings, combined with the potential of the new Greenbox venture, suggest that shares of Symbotic may currently be undervalued at $37.50/share.
Going forward, investors and traders may want to keep a close eye on other companies in this niche that go public. The sharp appreciation in the shares of Symbotic since its SPAC merger suggests there's demand in the capital markets for companies with a high likelihood of successfully pairing AI with robotics.
Market participants that prefer exchange-traded funds over single stocks can also consider the Global X Robotics & Artificial Intelligence ETF ( BOTZ ) and the ROBO Global Robotics & Automation Index ETF ( ROBO ), which are up 12% and 7%, respectively, in 2023.
Andrew Prochnow has more than 15 years of experience trading the global financial markets, including 10 years as a professional options trader. Andrew is a frequent contributor Luckbox Magazine.
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Trading Symbotic's Bright Future At The Crossroads Of AI And Robotics