We recently published a list of 12 Best Automation Stocks To Buy According to Hedge Funds. In this article, we are going to take a look at where Cognex Corporation (NASDAQ:CGNX) stands against other 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.
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).
A worker utilizing a vision sensor to verify discrete items.
Cognex Corporation (NASDAQ:CGNX)
No. of Hedge Fund Holders: 34
Cognex Corporation (NASDAQ:CGNX) offers machine vision products that solve critical manufacturing and distribution challenges. The company operates through the machine vision technology segment. Cognex Corporation’s products assist businesses in automating the manufacturing and tracking of discrete items such as mobile phones, EV batteries, and e-commerce packages.
The coming is making use of AI to advance its automation abilities. On January 14, Cognex Corporation (NASDAQ:CGNX) revealed the DataMan 290 and 390 barcode readers. These barcode readers utilize AI technology to streamline barcode scanning processes and increase operational efficiency. “The DataMan 290 outperformed other competitive solutions we tested, successfully reading codes that others couldn’t,” said the CEO of MTS – Modern Technology Systems, Peter Laurinčík.
In Q3 2024, Cognex Corporation launched AI-assisted labeling and a new AI model in its VisionPro deep learning products, which significantly reduces the time required to train vision models. The company’s AI-driven strategy will potentially increase its revenue as businesses look for AI-automated solutions. Moreover, the company is also expanding its customer base through its emerging customer initiative, with its first cohort of sales bringing in more than $1 million per week.
Impax Global Environmental Markets Fund stated the following regarding Cognex Corporation (NASDAQ:CGNX) in its Q3 2024 investor letter:
“Cognex Corporation (NASDAQ:CGNX) (Industrial Energy Efficiency, U.S.) sold off in the third quarter following a negative market reaction to the release of Q2 results. The share price had been moving higher throughout most of 2024 in anticipation of a recovery from factory automation weakness, with green shoots indicating abating headwinds and earnings normalization. While Q2 earnings exceeded expectations, below consensus Q3 guidance, management’s shift to a more cautious tone, and concerns of a weaker macroeconomic backdrop for this shorter-cycle, economically sensitive business, all contributed to a sharp sell-off. Despite a potential interruption of sequential improvement in their recovery, the long-term thesis remains intact.”
Overall, CGNX ranks 10th on our list of best automation stocks to buy according to hedge funds. While we acknowledge the potential of CGNX to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than CGNX but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
