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 Teradyne, Inc. (NASDAQ:TER) 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 team of engineers discussing around a fully-equipped flex test platform system.
Teradyne, Inc. (NASDAQ:TER)
No. of Hedge Fund Holders: 43
Teradyne, Inc. (NASDAQ:TER) is a renowned supplier of automated test equipment and robotics solutions internationally. The company operates through four segments: Semiconductor Test, System Test, Wireless Test, and Robotics. The company’s robotics segment manufactures robotic arms, autonomous mobile robots, and advanced robotic control software.
The company’s autonomous mobile robot arm MiR is working in partnership with its Danish partner collaborative robot firm Universal Robots. In addition to that, the company also has a collaboration with NVIDIA to assist it with new AI capabilities for automation applications. Teradyne, Inc.’s MiR1200 Pallet Jack is a breakthrough product that runs on NVIDIA-powered AI. During Q4 2024, the company formed a strategic partnership with Infineon, Germany’s leading semiconductor manufacturer, to support its goal in the power semiconductor space, strengthening its position in the automotive and renewables market.
However, the company’s robotics business did not end up according to the expectations due to weak demand. On February 3, Baird reduced the price target on TER shares from $150 to $140, maintaining an Outperform rating on the stock. The drop in price target comes after mixed fourth-quarter 2024 results, mainly due to the weakness in the robotics segment.
Despite the robotics segment delivering lower-than-expected, Teradyne, Inc. (NASDAQ:TER) successfully diversified its customer base. The company has reduced its reliance on the mobile market after achieving a 50% market share in computing VIPs.
Overall, TER ranks 5th on our list of best automation stocks to buy according to hedge funds. While we acknowledge the potential of TER 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 TER 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.
