We recently published a list of 8 Most Promising Robotics Stocks According to Hedge Funds. In this article, we are going to take a look at where The Boeing Company (NYSE:BA) stands against other most promising robotics stocks according to hedge funds.
The Service Robotics Industry Is on the Move
The robotics industry was once considered to eat human jobs and replace them with machines. However, robotics is not about replacing humans but it’s about improving and automating human tasks to reduce time and improve task efficiency. The AI boom has accelerated the adoption of automation in organizations. Companies, especially after the launch of ChatGPT, have been relying on generative AI services. Now, we are experiencing robotics alongside AI, a revolutionary development. Hospitality, agriculture, professional cleaning, automotive, and medical are some of the biggest industries using robots.
According to the International Federation of Robotics (IFR), the sales of professional service robots soared by 30% in 2023 worldwide. IFR’s statistics department registered over 205,000 robotics units in 2023, with the Asia-Pacific region recording the highest sales in the world. The Asia-Pacific region reported 80% of global robotics sales, accounting for almost 162,284 units.
The transportation and logistics service was among the markets with the highest robotics sales in 2023. The total units built for the application class transportation and logistics was approximately 113,000, up 35% year-over-year. The demand for the robotics industry is due to a shortage of skilled labour, as per the 2024 report by IFR. Elon Musk has been in the news since the launch of his company’s robotaxis. The robotaxis could be a game changer for robotics automation in outdoor environments.
Hospitality robots are another big thing in the robotics industry today. In 2023, more than 54,000 units were sold in the hospitality sector, with mobile guidance, information, and telepresence robots accounting for most of the robotics units. Sales for agricultural robots were 20,000, while cleaning robots reported sales of 12,000 units, up by 21% and 4%, respectively. Professional cleaning robots are mainly being used for floor cleaning, which represents nearly 70% of the total units sold in 2023. Medical remains another growing sector as medical robots soared by 36% to almost 6,100 units. The demand for surgery and diagnostics robots was the highest as they grew by 14% and 25% year-over-year.
The US Robotics Market
The United States remains the leader among the service and medical robot manufacturers. Nearly 199 companies are based out of the US, with 66% of them producing professional service robots, 27% consumer service robots, and 12% medical robots. China follows the US with 107 service and medical robot manufacturers, while Germany ranks third with 83 companies. Earlier this year, Bill Gates pointed out several “cutting-edge robotics startups and labs” that excite him, including three companies focused on developing humanoids. One of them is Agility Robotics which focuses on developing human-centric, multipurpose robots for logistics work.
Global X Robotics & Artificial Intelligence ETF (NASDAQ:BOTZ), Robo Global Robotics and Automation Index ETF (NYSE:ROBO), and First Trust Nasdaq Artificial Intelligence & Robotics ETF (NASDAQ:ROBT) are three of the well-known robotics ETFs. These ETFs have surged more than 37%, 20%, and 19% over the last 1 year, as of November 7. The average return of these ETFs is over 25% in the last 1 year, which is lower than the S&P 500 index returns of over 35% during the same period.
Our Methodology
For this list, we sifted through various ETFs and internet rankings covering robotics stocks to compile an initial list. We then selected the top robotics stocks that were the most popular among hedge funds and had a market capitalization of at least $1 billion, as of November 7. We ranked the top 8 stocks based on the number of hedge fund holders in Q2 2024 as per Insider Monkey’s database. The list is ranked in ascending order of the number of hedge fund holders.
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 commercial jetliner parked at an airport, reflecting the companies success in aviation.
The Boeing Company (NYSE:BA)
Number of Hedge Fund Holders: 42
The Boeing Company (NYSE:BA), mainly known for its traveling aircraft, is one of the world’s largest producers of civilian and military aircraft. The company uses autonomous robots in a large portion of its military operations. The company’s Echo Voyager is an autonomous underwater vehicle (AUV) that’s used by the military to transport equipment deep beneath the sea. The Boeing Company is also expanding its operations into space with its X-37B, which operates within 150 to 500 miles above Earth for long-term space missions.
The Boeing Company (NYSE:BA) has been suffering over the past few years due to quality issues, which has taken a financial hit. After depleting its free cash flow margin from the high of 13.9% in 2018, Boeing is trying to overcome its quality control problems and leadership failures. Lately, the company has been trying to recover and in 2022 and 2023, its free cash flow turned positive. However, after disappointing Q3 outcomes, the company expects to have cash outflows in Q4 and the full year 2025.
The Boeing Company (NYSE:BA) suffered a net loss of $6.17 billion in Q3, taking the total loss toll to almost $8 billion in 2024 so far. In Q3, the company’s revenue was reported at $1.34 billion, a slight decrease of 1% year over year. Boeing’s CFO during the earnings call addressed that turning this big ship will take time and the firm has the potential to be great again.
A notable development for the company is that its machinists have ended their two-month strike and will be back to work after a new union contract was agreed on November 4. In addition, Boeing benefits from the ongoing wars as it is one of the largest defense contractors. On September 30, Boeing received an order of $6.9 billion from the US Air Force to supply small-diameter bombs (SDB). Despite the challenges, the company remains a major defense player with its autonomous robot arms in demand.
Overall, BA ranks 5th on our list of most promising robotics stocks according to hedge funds. While we acknowledge the potential of BA to grow, our conviction lies in the belief that 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 BA 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.
