MarketsSep 1, 2022
Robotic sales break records as companies struggle with labor costs; are robotics ETFs worth the investment?
Automation Trends
Victor Lei
Discover
Robots have one job — to do as we say — and what we say varies depending on the industry. Amazon is using drones for delivery and robotic arms are flipping our burgers; there’s no shortage of use cases.
For the third straight quarter — North American robot sales reached a record high — driven by a worker shortage, supply chain disruptions and the need to drive costs down.
The business case for robotics is simple. Businesses are struggling with higher costs and labor shortages, and robotics is one solution. Automation is also becoming more affordable — opening its use to more industries.
A 2021 Duke University survey found that one-third of firms were exploring replacing workers with automation.
Per WSJ, electric vehicles (EVs) are easier to incorporate robotics — which could drive their adoption as the world shifts to EVs. Another trend driving robotics is the return of manufacturing back home (onshoring).
An explosive e-commerce industry led to more warehouse demand and, in turn, warehouse automation.
Per the CEO of GXO Logistics — an operator of 900+ warehouses — only 5% of the warehousing industry is automated (BBG).
Walmart invested in and is using Symbotic’s robots (NASDAQ:SYM) to automate their warehouses. FedEx, warehouse owner Prologis and others are also investing significant amounts into warehouse robotics.
In June, Symbotic went public by merging with SoftBank’s SPAC. But with a market cap near $7B, don’t count on Walmart acquiring the company.
The Robo Global Robotics and Automation Index ETF (NYSE:ROBO) is one ETF that holds a broad range of global robotics-related stocks. But beware, the ETF’s 86% return since its launch in 2013 has far underperformed the S&P 500’s 124% return in the same time period.
Looking deeper, international stocks make up over half the ETFs holdings — with 17 Japanese-traded companies — a market that has underperformed significantly. The S&P 500 wins this round.
