In this article, we will take a look at the 12 Best Automation Stocks to Buy According to Hedge Funds.
The rise of generative AI has skyrocketed automation, while robotics are disrupting industrial automation. On the other hand, supply chain automation has reshaped traditional operations from removing warehousing bottlenecks to inventory management, and demand forecasting. In inventory tracking, advanced warehouse management networks, powered by AI and ML algorithms, assist in optimizing inventory placement, resource allocation, route planning, and more.
Robotics a Key Segment to Automation
Professional service robot sales soared by 30% in 2023, according to the International Federation of Robotics (IFR). IFR’s statistics department data shows that over 205,000 robotics units were sold in 2023, with Asia-Pacific accounting for 80% of global robotics sales. Transportation and logistics service robots sales accounted for 113,000 units in 2023, a rise of 35% from 2022. In addition to that, Medical robots are in huge demand, and medical robot sales soared by 36% to nearly 6,100 units in 2023.
Apart from robotics, quantum computing is revolutionizing various industries. Other technologies including virtual reality (VR), augmented reality (AR), big data, data analytics, and 5G technology are key to driving automation across various segments.
Global X Robotics & Artificial Intelligence ETF (NASDAQ:BOTZ) and Robo Global Robotics and Automation Index ETF (NYSE:ROBO) have surged more than 11% and 8.50% over the last year, respectively. Considering the growing demand for automation systems and robotics, automation stocks hold much promise.
With that, let’s take a look at the 12 best automation stocks to buy according to hedge funds.
A warehouse automation system in operation, with robotic arms managing inventory efficiently.
Our Methodology
We used automation and robotics ETFs along with online rankings to shortlist an initial list of automation stocks. We then selected the 12 automation stocks that were the most widely held by hedge funds. The list is sorted in ascending order of the number of hedge fund holders, as of Q3 2024.
Why do we care about what hedge funds do? 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).
12 Best Automation Stocks To Buy According to Hedge Funds
12. Pegasystems Inc. (NASDAQ:PEGA)
No. of Hedge Fund Holders: 28
Pegasystems Inc. (NASDAQ:PEGA) develops and offers enterprise software solutions including AI-powered decision engines, automation tools, and customer engagement platforms. The company assists firms with AI decision-making and workflow automation. Many leading global businesses including Google, Verizon, RaboBank, and HCA Healthcare, rely on Pegasystems automation services.
On January 24, Wedbush analyst Daniel Ives upgraded the price target on PEGA shares from $100 to $125 and maintained an Outperform rating on the stock. Ives sees Pegasystems Inc. (NASDAQ:PEGA) as a growing AI company, assisting businesses to make the most of their AI investments by automating workflow, accelerating implementation, and enhancing sales cycles.
In the third quarter of 2024, Pegasystems Inc. (NASDAQ:PEGA) experienced a 14% year-over-year growth in annual contract value (ACV), with Pega Cloud soaring over 26% from a year ago. The company’s latest GenAI blueprint, which is a collaborative workspace that uses generative AI to design applications faster, is getting attention. The new features will boost the company’s contract value for current customers going forward.
11. UiPath Inc. (NYSE:PATH)
No. of Hedge Fund Holders: 34
UiPath Inc. (NYSE:PATH) is a leading robotics process automation (RPA) firm that offers software bots. The company assists businesses handle virtual tasks and acts as a virtual assistant to the human workforce. The company is a leader in its category with the latest innovation and agentic automation, combining AI agents, robots, and humans to work together to complete tasks.
The company is in a strong position to benefit from the rising demand for agentic AI needed to manage complex business workflows. On January 27, UiPath Inc. (NYSE:PATH) revealed findings from a new study that highlighted that 90% of IT executives have business operations that would require agentic AI. With AI agents becoming increasingly popular in workflow, the company already has a solution. The UiPath Platform is designed to accelerate the shift towards a new era of agentic automation. The company is focusing on data use and AI-powered customer engagement solutions, which will potentially drive new revenue opportunities and platform use cases.
During Q3 FY2024, UiPath Inc. (NYSE:PATH) showed robust performance with an annualized renewal run rate (ARR) of almost $1.61 billion, indicating a 17% rise from a year ago.