In this piece, we will take a look at the 10 cheap robotics stocks to buy.
The progress of Western civilization is built on industrialization. The late 19th century and the mid 20th century solidified the role of machines in factories, leading to vast output improvements and cost benefits that benefited society in the form of high quality, mass produced goods.
Now, the 21st century is the age of information courtesy of the Internet. In developed economies, the services and tertiary sectors reign supreme because human intellect is valued more than the ability to do grunt work. But this doesn’t mean that companies aren’t focusing on industrial production. In fact, estimates from the International Federation of Robotics (IFR) show that the rate of the number of installed industrial robots in America more than doubled in the decade between 2008 to 2018. In 2008, 15,170 industrial robots were installed in the US while this figure had grown by almost three fold to 40,373 in 2018.
This growth is important given that most major American consumer electronics companies shifted their manufacturing and production to China in the 1990s to take advantage of the low costs offered. In fact, this criticality of robots to manufacturing is made clear by the fact that 80% of the industrial robot installations in America in 2018 were in the manufacturing sector.
However, just because America had added tens of thousands of robots by 2018 doesn’t mean that the rest of the world is sitting ‘idle.’ As per the IFR, America was not among the top three countries by the number of industrial robots installed in 2017. This title went to China, which had installed 501,185 industrial robots by 2017 and added another 154,032 units in the following year. In second and third places were Japan and South Korea, with 297,215 and 273,146 industrial robot installations, each. However, having the highest number of robots installed in the world is only one side of the picture. Like humans, robot productivity is also best in groups, and South Korea, Singapore, and Germany were the three highest countries in terms of robot density in 2017.
The key driving factor behind the growth of industrial robots is lower cost according to Cathie Wood’s Ark Invest. In its research, the firm points out that industrial robot costs have dropped by 50% every time their production has doubled. This cost reduction doesn’t mean that robot quality is dropping, since according to Ark’s data, robot performance has improved “33-fold in seven years.” Ark concludes by pointing out that after Jeff Bezos’ eCommerce company installed the Kiva mobile robots, its time from click to ship at a warehouse dropped by 78%.
But what about the value added by robots? After all, the primary motive of a business is profit and if the robotics industry is to thrive then it has to add economic value. On this front, data shows that across industries worldwide ranging from agriculture to construction, mining, and utilities, industrial robots added a cool $211.7 trillion value in 2017. Within these, metals and electronic manufacturing, construction, and chemical manufacturing benefited the most. Across these industries, industrial robots added $2.2 trillion $1.3 trillion, and $1.2 trillion in value, respectively,
Delving deeper, one industry that has seen a lot of hype when it comes to robots particularly humanoid robots, is the automotive industry. This is primarily due to Elon Musk’s belief that his car company can become a humanoid robot company in the future to generate a trillion dollars in revenue per year. We covered this in detail as part of our coverage of $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley, so you should check it out for a detailed primer on the humanoid robot industry.
But while Musk and MS might be bullish for humanoid robots, the natural question to ask when critically analyzing their estimates is whether automotive manufacturing demand is also driving broader industrial robot demand. Looking at the data, we see a mixed picture over the years. For instance, in 2017, 2018, and 2019, the automotive industry added 125,700, 125,581, and 105,379 new robots, respectively. During the same years, the electronics manufacturing industry added 121,955, 105,153, and 87,712 new robots, respectively. So, before the coronavirus pandemic, the automotive industry was the world’s largest customer for industrial robots. Yet, in 2020, this picture changed, as in 2020, 2021, and 2023, the number of new robots demanded by the automotive industry was 79,849, 119,405, and 136,130 new robots, respectively. On the other hand, the electronics industry added 109,315, 136,670, and 156,936 new robots.
This was a historic shift and it displaced automotive dominance in the industrial robotics industry since 1961. As per the IFR, while the automotive production shutdown during the pandemic was to blame for this to an extent as production shutdowns led to delayed investments, between 2015 and 2020, industrial robot installations in the automotive industry had dropped by a compounded annual growth rate (CAGR) of 4% per year. On the flip side, the demand for consumer electronics boomed during the pandemic due to stay at home mandates and the shift to remote working. Coupled with the social distancing mandates in the manufacturing sector, it kicked started a historic shift.
With these details in mind, let’s take a look at the cheapest robotics stocks to buy.
A robotic arm holding a semiconductor chip, emphasizing the precision and quality of the company’s production equipment.
Our Methodology
To make our list of cheap robotics stocks to buy, we started by ranking the holdings of the biggest robotics ETFs by their average analyst share price upside. This was chosen instead of the P/E ratio since several firms are unprofitable. Then, the stocks with the lowest P/E ratios were selected and they were further refined to only include those stocks with an average analyst rating of Buy or better.
For these stocks, we have also mentioned the number of hedge fund investors. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here).
10. IPG Photonics Corporation (NASDAQ:IPGP)
Number of Hedge Fund Holders In Q1 2024: 30
Price Upside: 32%
Average Share Price Target: $87.17
IPG Photonics Corporation (NASDAQ:IPGP) is a mid sized American manufacturing technology company. It is one of the few companies in the world that are capable of making and selling fiber lasers with a broad set of use cases that range from manufacturing to cutting and welding. In robotics, this means that IPG Photonics Corporation (NASDAQ:IPGP)’s products can be used to make robots, and crucially, it is also a rare company that makes and sells robotic laser systems and workstation families. The fact that it is an American firm places IPG Photonics Corporation (NASDAQ:IPGP) in a favorable position to benefit from manufacturing incentives from the government and gain a leg up over its Chinese rivals that are competing with it on the basis of affordability and lower prices. Yet, since its products are geared primarily towards industrial use cases, IPG Photonics Corporation (NASDAQ:IPGP) does well when big businesses are comfortable spending money and it struggles when the economy is slow.
IPG Photonics Corporation (NASDAQ:IPGP)’s dependence on macroeconomic health was clear during its Q2 2024 earnings call:
“Sales in North America decreased 2% year-over-year. We saw a strong growth in medical, 3D printing and advanced applications, which was offset by lower revenue in cutting, welding and cleaning applications. Sales in North America held up relatively well, but macro headwinds have continued in the general industrial markets, as well as led to reduced EV investments. In addition, continued inventory management by cutting OEMs is leading to more uncertain outlook in the region. In Europe, sales decreased 27% compared to the prior year. Similar to the trends we saw in North America, cutting sales were impacted by large OEM customers, reducing purchases as they manage their inventories. Economic conditions in Europe seem to be deteriorating further and impacting investments in industrial and automotive markets.
TV investment is also delayed and current projects are being pushed out into 2025. Revenue in China decreased 34% year-over-year as demand declines in general industrial and e-mobility markets, negatively impacting sales across cutting and welding applications. On the other hand, sales to cleaning and 3D printing applications continued to increase in the region. China revenue improved sequentially, and we are seeing some stabilization there.”
9. Illumina, Inc. (NASDAQ:ILMN)
Number of Hedge Fund Holders In Q1 2024: 48
Price Upside: 21%
Average Share Price Target: $145.84
Illumina, Inc. (NASDAQ:ILMN) is a sizeable medical diagnostics and research firm based in San Diego, California. It targets the demand for automation and robotics products in the healthcare industry through items such as DNA library preparation kits for gene sequencing and robot control software. While on its own these products provide Illumina, Inc. (NASDAQ:ILMN) with a limited competitive advantage, the firm has a rapidly growing market at its disposal due to its strong position in the gene sequencing industry where it commands more than fourth fifths of. the global gene sequencing industry. This dominant market share means that Illumina, Inc. (NASDAQ:ILMN) can rapidly learn from customer experiences of its automation products and maintain and grow its competitive edge in the industry. Additionally, its business model is built on pricey products that are sold for long term use, which means that Illumina, Inc. (NASDAQ:ILMN) also has the potential to earn recurring revenue.
Patient Capital Management mentioned Illumina, Inc. (NASDAQ:ILMN) in its Q2 2024 investor letter. Here is what the firm said:
“Illumina Inc. (ILMN) is a good example. We entered the name late last year as the company began to trade at a 5-yr low. The company is a leader in the genomic sequencing space but made an ill-advised acquisition of Grail, a blood- based multi-cancer early detection product, in 2021 for $8B dollars. Grail was an annual ~$600m drag on profitability hitting the financials at the same time that competition began to pick up and the overall demand environment began to weaken. Despite increased competition in the genome sequencing space, Illumina continues to be a leader with ~80% market share today. With the successful separation of Grail Inc. (GRAL) in June, Illumina has now returned to a pure-play sequencing company. As the company returns to historical profitability post Grail spin-off and as the demand environment normalizes post COVID, we believe you can buy a market leader in a secularly growing industry for less than a market multiple.”
8. Microchip Technology Incorporated (NASDAQ:MCHP)
Number of Hedge Fund Holders In Q1 2024: 35
Price Upside: 20%
Average Share Price Target: $93.96
Microchip Technology Incorporated (NASDAQ:MCHP) is a backend robotics company that makes and sells products such as signal processors and microcontrollers. These are products that are used in a wide variety of computing systems, from robots to data centers. This allows Microchip Technology Incorporated (NASDAQ:MCHP) to benefit from a sizeable computing market at its disposal, as it can pivot between several high growth industries such as artificial intelligence data centers and robots. However, Microchip Technology Incorporated (NASDAQ:MCHP) is also vulnerable to the broader cyclical nature of the chip industry, where it suffers from several quarters of revenue slowdown because of demand and supply mismatch. However, a key competitive advantage for the firm is its diversified product portfolio which is geared towards IOT, self driving, edge computing, robotics, and other high growth industries through hardware and software products.
Microchip Technology Incorporated (NASDAQ:MCHP)’s management shared key details for its products that can be used in robots during the Q1 2025 earnings call where it shared:
“In early July, we announced our entry into the 64-bit embedded microprocessor market with a suite of products, developments to address high-performance embedded processing applications, including AI-enabled edge solutions.
This extends our strong 32-bit embedded microprocessor portfolio to higher performance and increased capabilities while preserving Microchip’s historically strong ecosystem of leading development tools to make adoption easy for embedded system design engineers. Microchip is the only company to offer the widest embedded control and processing platform from 8 to 64 bit as well as FPGAs with a common development to ecosystem, that’s empowering customers to innovate and reuse their work across a wide spectrum of markets and applications.”
7. Nordson Corporation (NASDAQ:NDSN)
Number of Hedge Fund Holders In Q1 2024: 23
Price Upside: 18%
Average Share Price Target: $279.33
Nordson Corporation (NASDAQ:NDSN) is an industrial products company headquartered in Westlake, Ohio. It is one of the oldest firms of its kind since it was set in 1909. Nordson Corporation (NASDAQ:NDSN) is a specialty industrial products firm that sells items used to dispense a variety of industrial raw materials such as adhesives, polymers, sealants, and coatings. Its extensive experience in the dispensing industry has enabled Nordson Corporation (NASDAQ:NDSN) to develop a competitive edge when it comes to automating solutions such as 3 axis and 4 axis robots. The firm is also one of the few dividend paying stocks on our list, and its ten cent dividend hike in August marked the 61st year in which Nordson Corporation (NASDAQ:NDSN) had increased its dividend. It is also well protected against economic downturn through an operational presence in 35 countries, and Nordson Corporation (NASDAQ:NDSN) also plans to expand its presence to the medical industry by acquiring Atrion Corporation.
6. PTC Inc. (NASDAQ:PTC)
Number of Hedge Fund Holders In Q1 2024: 42
Price Upside: 18%
Average Share Price Target: $203.44
PTC Inc. (NASDAQ:PTC) is a software company headquartered in Boston, Massachusetts. Its products enable businesses to develop and manufacture products through design, lifestyle management, and other services. The product portfolio positions it to capture orders from existing and new companies that might be seeking to make robotic and automation products. PTC Inc. (NASDAQ:PTC) has already made inroads into the robotics industry, and a couple of years back, it teamed up with another company to develop the world’s first bricklaying robot called Hadrian X. Being a software and services provider also means that PTC Inc. (NASDAQ:PTC) benefits from high margins, which allow it to manage costs during economic turbulence. Additionally, the key to its growth is customer partnerships, and if it successfully delivers, then customers are likely to return to PTC Inc. (NASDAQ:PTC) for future products as well.
Madison Investments mentioned PTC Inc. (NASDAQ:PTC) in its Q1 2024 investor letter. Here is what the fund said:
“PTC was one of our oldest portfolio holdings (~23 years!) and best performing stocks. We made our initial investment in PTC in 2001(in those days the company’s full name was Parametric Technology Corporation) after the dot com crash when the stock had an equity market value of approximately $1billion. We sold our final share near an equity market value of approximately $22billion. When we first initiated the investment position, we saw an attractively valued software company that provided very sticky, difficult to replace design software for engineers in the manufacturing sector. Over that 20-year span, PTC has grown both organically and through strategic M&A into one of the most vital design software engineering platforms in the world. Companies like BMW, Rockwell International, Medtronic, Hitachi, Boeing, Airbus, Volvo, Cannondale, Toyota, and GM all use PTC to design, collaborate and maintain the lifecycle of their franchise products and platforms. This investment illustrates not only the financial potential and opportunity of small cap investing but also our PMV process to identify and capitalize on strategic assets like PTC.”
5. Teradyne, Inc. (NASDAQ:TER)
Number of Hedge Fund Holders In Q1 2024: 34
Price Upside: 13%
Average Share Price Target: $142.42
Teradyne, Inc. (NASDAQ:TER) is one of the biggest semiconductor testing equipment providers in the world. This provides it with a considerable competitive advantage since it enjoys deep partnerships with a limited number of large scale chip manufacturers such as TSMC and Intel. Additionally, Teradyne, Inc. (NASDAQ:TER)’s presence in the chip industry and its business model allow it to operate in the robotics industry on multiple levels. On one front it provides automated testing equipment to chip companies, which makes it a front end robotics company. On the other, Teradyne, Inc. (NASDAQ:TER) stands to benefit from the chips that are used to make robots for other industries such as automotive manufacturing. Additionally, it has a considerable presence in a highly growing robotics industry, the warehousing industry through offering a variety of automated pallet pickers.
Teradyne, Inc. (NASDAQ:TER)’s management shared key details for its sizeable Robotics business division during the Q2 2024 earnings call where it outlined:
“Our highest priority in our Robotics go-to-market transformation is the development of an OEM solutions channel for UR. We have seen that customers purchasing cobot-based solutions from these partners get into production more quickly and have fewer problems than customers that build their own solutions or rely upon an integration partner. There are two aspects to the OEM Channel strategy. The first is signing up new OEM solution partners. In the first half of 2024, we have increased the total number of OEM solutions partners by 8%. Second, we work with these partners to get them to scale, which we define as having an annual revenue run rate above $1 million. Midway through the year we have nearly as many OEM solution partners that have reached that revenue level as we had in all of 2023.
One of our largest revenue OEM partners in the first half of 2024 uses our cobots in an AI based logistics solution. Overall, the OEM solutions channel has shown over 70% growth from the first half of 2023 to the first half of 2024. In the second quarter, the OEM channel represented over 30% of UR’s revenue. Finally, because of the criticality of the processes that our Robotics are being used to automate, we saw an opportunity to build a strong service business. In the first half of 2024 we launched managed service offerings at UR and MiR and are beginning to see customer uptake. On balance, the positive effect of these growth vectors and the challenging demand environment, we are expecting growth towards the low end of this year’s target 10% to 20% range.”
4. Zebra Technologies Corporation (NASDAQ:ZBRA)
Number of Hedge Fund Holders In Q1 2024: 31
Price Upside: 11%
Average Share Price Target: $369.14
Zebra Technologies Corporation (NASDAQ:ZBRA) is a technology company that provides technologies that are primarily used in the logistics and warehousing industry. This exposes it to the massive warehouse robotics market, where big players such as Amazon are rushing to automate their facilities, reduce costs, and worker injuries, and increase efficiencies. Zebra Technologies Corporation (NASDAQ:ZBRA) has been aggressively expanding its presence in the robotics industry after acquiring a robotics firm for $290 million in 2021. This has allowed it to extensively target the autonomous mobile robot industry used predominantly in warehouses. While this allows Zebra Technologies Corporation (NASDAQ:ZBRA) to develop competitive advantages, it also leaves it vulnerable to downturns in the eCommerce industry during times of slow consumer spending.
Zebra Technologies Corporation (NASDAQ:ZBRA) shared details about its warehouse products during the Q2 2024 earnings call:
“Let’s briefly walk through the journey with a few high level exams. In manufacturing, our machine vision solutions provide quality inspection and track and trace visibility throughout the process. In a warehouse, our wearable mobile computers, autonomous mobile robots and comprehensive RFID portfolio transform receiving, picking and shipping. As the product arrives at a store, associates are equipped with Zebra software running on our mobile computers to assist customers’ stock inventory and fulfill online orders.
And when an item is delivered to your home, you receive a notification and picture from Zebra’s handheld device verifying on time quality delivery.”
3. Autodesk, Inc. (NASDAQ:ADSK)
Number of Hedge Fund Holders In Q1 2024: 52
Price Upside: 10%
Average Share Price Target: $271.57
Autodesk, Inc. (NASDAQ:ADSK) is one of the biggest software companies in the world. It provides design software that allows robot manufacturers and other firms to make their products. Some Autodesk, Inc. (NASDAQ:ADSK) products that cater to robotics include its Autodesk 365 software and Cobot software which allows humans and machines to work together in a manufacturing environment. Autodesk, Inc. (NASDAQ:ADSK)’s dominant role in the design software industry means that instead of growing its customer base, it has to retain customers by continuously upgrading its products to suit their needs. It also allows the firm to benefit from stable recurring revenue, as signing new customers allows Autodesk, Inc. (NASDAQ:ADSK) to earn subscription revenue as well. However, its significant exposure to the industrial sector means that Autodesk, Inc. (NASDAQ:ADSK) can only fire on full cylinders if rates are low and industrial spending is high.
However, there has been some turbulence for the firm recently as outlined by Polen Capital in its Q2 2024 investor letter:
“With Autodesk, most of the stock’s price weakness came in April. The company announced that it would delay the release of its earnings and 10-K filing as it launches an internal investigation regarding its practices on some non-GAAP financial metrics. Upon further analysis, we were encouraged to hear that they were taking this very seriously and being very comprehensive in their investigation. Ultimately, [it] announced it was closing the investigation and that no re-statements would be required. As discussed in the following section, we chose to exit the position in favor of a more attractive investment.
. . . .We sold our small position in Autodesk to help fund our purchase of Shopify. We still think Autodesk is an advantaged business, with 95%+ recurring revenue, dominant in its end market, and nice tailwinds behind digitization in that end market. It should be a durable grower over time, perhaps with continued fits and starts, but we found the risk-reward around Shopify to be more compelling”
2. ServiceNow, Inc. (NYSE:NOW)
Number of Hedge Fund Holders In Q1 2024: 90
Price Upside: 7%
Average Share Price Target: $872.34
ServiceNow, Inc. (NYSE:NOW) is a sizeable software company that provides workflow process automation products. This makes it the only software robot company on our list. ServiceNow, Inc. (NYSE:NOW)’s software robots allow companies to automate their business processes such as those involving repetitive and rule based tasks. These allow for cost reductions and greater efficiency, and since ServiceNow, Inc. (NYSE:NOW) is one of the biggest names in the industry, it also benefits from brand recognition, deep customer relationships, and sizeable recurring revenue. Additionally, its scale means that ServiceNow, Inc. (NYSE:NOW) investors focus more on cost control for its valuation as opposed to the cost and growth valuation for other software as a service (SaaS) businesses.
Lakehouse Capital mentioned ServiceNow, Inc. (NYSE:NOW) in its Q1 2024 investor letter. Here is what the firm said:
“US-based software company, ServiceNow, provided another strong result, continuing its long and consistent track record of 20%-plus revenue growth combined with healthy profitability. Subscription revenues grew 25% year-on-year to $2.5 billion and free cash flow grew 47% year-on-year to $1.2 billion. The company’s core operating metrics were also impressive with remaining performance obligations growing 26% year-on-year to $17.7 billion (i.e. roughly 2x 2023 revenue) and renewal rates holding steady at 98%. Performance was evenly spread across segments, products, and geographies, with notable strength in the US federal government. The company now boasts 1,933 customers generating in excess of $1 million in Annual Contract Value (ACV), which is pleasing to see as it implies multiple solutions are involved and that the company’s platform model is increasingly resonating with customers. In our view, ServiceNow is one the highest quality software businesses globally as the combination of consistent growth at scale, robust free cash flow generation and a large addressable market make it a compelling opportunity.”
1. Samsara Inc. (NYSE:IOT)
Number of Hedge Fund Holders In Q1 2024: 22
Price Upside: 5%
Average Share Price Target: $41.54
Samsara Inc. (NYSE:IOT) is a technology company that focuses on the Internet of Things (IOT) industry. This industry leverages the connectivity of the Internet to automate industries, supply chains, hospitals, and other sectors. Robots, particularly those in the logistics and warehouse industry are a key part of IOT since they are connected to centralized networks for observation and operation. This also exposes Samsara Inc. (NYSE:IOT) to the robot industry, and one such example is the firm’s GPS tracking products and their integration with DashPing’s Freight Bots for vehicle tracking, routing, and dispatch operations. Holistically, Samsara Inc. (NYSE:IOT)’s software business model means that it also benefits from recurring revenue. In fact, the firm’s first fiscal quarter saw it grow its high value customer base as those with $100,000 or more in ARR made up 53% of its total ARR for a four percentage point annual jump.
During the Q1 2025 earnings call, here’s what Samsara Inc. (NYSE:IOT)’s management had to say on this front:
“First, we continue to focus on serving large enterprise customers to drive durable and efficient growth at scale. We now have 1,964, $100,000-plus ARR customers, representing 43% year-over-year growth. We also grew our average ARR per $100,000-plus customer from 305,000 in Q1 last year to 316,000 in Q1 this year. The combination of more customers added and an increase in the average ARR per customer grew our ARR mix for $100,000-plus ARR customers to 53% in Q1, up from 49% one year ago and 45% two years ago. Second, our customers increasingly utilize Samsara as a system of record for physical operations by subscribing to multiple applications all on one unified platform. 94% of our $100,000-plus ARR customers and 83% of our core customers subscribe to multiple Samsara products.
We’re also seeing multi-product adoption at scale. Our two vehicle-based applications, Video-Based Safety and Vehicle Telematics, each represents more than $450 million of ARR, and our largest non-vehicle-based application, Equipment Monitoring, which is used to locate and manage field assets, is doing more than $125 million of ARR.”
IOT is a cheap robotic stock seeing favor from analysts. But our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than IOT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.
Disclosure: None.
