Invest in the Future: Why Robots are Exciting Investments
Investments

Invest in the Future: Why Robots are Exciting Investments 

There is increasingly more automation in our everyday lives. Robots are cheaper and easier to produce so they can be found in nearly every area of our lives. They assist us not only with agriculture, medicine, and e-commerce, but also in our private lives and at home. The rapid progress of automation offers interesting investment opportunities for investors.

Robots are becoming the norm. Large robotic equipment is already common in agriculture and the automotive industry, but as their components increasingly become smaller and more precise, the size of the robots themselves is also likely to decrease soon. Some of them have already become an inherent part of our lives, like smartphones and car sensors. Others are still works in progress, like robots with tactile sensors. Who knows what other automation projects are underway in research labs?

Thanks to advances in technology, robots are being used in fields traditionally occupied by humans. Today, robots not only move heavy pallets, but they also sort tomatoes, scan credit cards, and serve latte macchiato.

Self-Driving Cars Coming Soon

Automation is even taking place in mail delivery. Same-day parcel deliveries are being handled by unmanned aerial vehicles (UAVs), a.k.a. drones, instead of postal workers.

A driver's license soon may no longer be required to drive a car, as well. Companies like Volvo, GM, Audi, Nissan, and BMW are using artificial intelligence (AI) to work on developing fully autonomous vehicles and are expected to start production within the next five years. Meanwhile, Google is planning to launch a partially self-driving Toyota Prius for 2018.

Perception of Robots Is Changing

It is not just robots that have changed. Our perception of automation is also different now. Some things that would have never been accepted a decade ago are now a matter of course. And the trend is certain to continue.

“This is a sensitive area,” says Peter Hensman, global strategist at Newton. “How would people feel if their healthcare assistant was a robot? Probably not very comfortable," says Mr. Hensman. “But opinions can change. We used to be very skeptical of speech recognition systems. Today, most people use these kinds of applications regularly without giving it much thought. A lot depends on how these new technology concepts are perceived. And a lot also depends on how comfortable people are with them.”

According to statistics, our perception has already been changed. An example of this can be found in the medical field: The number of surgical procedures performed using the help of robots to increase accuracy rose 16% from Q1 2015 to Q1 2016.

What Benefits Are There in Robotic Automation?

Robots are suitable for more than just activities that require strength or accuracy. Faced with dwindling farmland, growing populations, and the need to increase the supply of food, agriculture is another field that is likely to benefit from the use of robots, including driverless tractors, drones, or swarm robotics for the harvest season. They could cut costs and be suitable for indoor farming. According to a report on agricultural robots by Tractica, the number of such robots sold per year will rise from 33,000 in 2015 to 992,000 in 2024.

Personal household robots help us with cleaning and washing up. At the Starwood Hotel in Palo Alto, California, robots replace towels, and robotic vacuum cleaners are also being sold extensively in both Europe and the US. There are also examples like Jibo, a “family robot,” designed by the Massachusetts Institute of Technology, which can identify different family members and read stories to children.

Robots are still associated with androids like R2-D2 in the public eye, but one cannot forget that there are many different types of robots. Aside from the hardware, every robot needs an operating system that enables it to perform its actions. For example, “Driverless cars need software to control them,” says Uwe Neumann, Credit Suisse Equity Research Analyst. “The fact that a car is produced by Mercedes doesn’t mean Mercedes produces the software, as well. Companies that specialize in such software produce it.”

Are Robots a Gold Mine for Investors?

Although it is likely to still take some time to reach its full investment potential, the robot sector looks promising for further development. “We are seeing positive trends in this market. So far, development has been rather gradual, but it is picking up speed,” says Neumann.

Tractica estimates that the next five years will revolutionize the way we think about robots. Non-industrial robot revenues are likely to grow tenfold within this period, and with the development of AI, big data analytics, and the Internet of Things, we will start to view robots not just as hardware, but also as software. This is important for investors to note.

Governments Want to Invest in Automation

The potential of robotics has been already recognized by some governments. Japanese Prime Minister Shinzo Abe suggested that robotics be integrated into the country’s growth plan. Two aims of the plan introduced in 2014 are a twenty-fold increase in the use of robots in agriculture and double the use in the manufacturing industry by 2020.

Since Japan’s population is contracting, robots are meant to help improve productivity. Although people are afraid that automation could result in job losses, robots could take on the dangerous and unappealing jobs that people should not or do not want to perform.

How do you invest in Robotics?

“Around the world, new players and markets are emerging that will take on an important role in the ongoing development of the robotics industry,” says Tractica research director Aditya Kaul. “Technologies like AI, machine vision, voice and speech recognition, tactile sensors, and gesture control will drive robotic capabilities far beyond what is possible today, especially in terms of autonomy.”

With advancing technology, robotics opens a new investment universe with numerous options. You can invest in hardware or software, both of which are seeing strong development. “Given the large number of potential opportunities, it makes the most sense to invest in different areas of application within the robotics industry,” adds Neumann. There is an increasing number of big players on the market and startups with enticingly high yields as well as forward-thinking robotics investors.

The future is now. It appears that robots are here to stay and that they will become increasingly advanced. The development of robots certainly provides some food for thought for every investor.