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 Zebra Technologies Corporation (NASDAQ:ZBRA) 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 tech-savvy employee testing a real-time location system in a warehouse.
Zebra Technologies Corporation (NASDAQ:ZBRA)
Number of Hedge Fund Holders: 35
Zebra Technologies Corporation (NASDAQ:ZBRA) has emerged as one of the top robotics companies. Zebra Technologies offers various software and hardware, with autonomous mobile robots among its famous product lines. The firm operates through two segments including, Asset Intelligence & Tracking (AIT) and Enterprise Visibility & Mobility (EVM). The company’s famous Fetch100 Roller and Fetch100 Shelf help transport objects such as bins, totes, and packages in workplaces, while Fetch100 Research is designed to support the demands of teachers and academics. The company has customers all over the world in industries including retail, manufacturing, transportation and logistics, and healthcare.
In 2021, Zebra Technologies Corporation (NASDAQ:ZBRA) acquired Fetch Robotics for $290 million. Zebra Technologies has been aggressively expanding its presence in the robotics industry since the acquisition of the robotics firm. Considering the opportunity in the robotics market, Zebra Technologies is primarily targeting the autonomous mobile robot industry. The company sells its products and services mainly through distributors, value-added resellers (VAR), independent software vendors (ISVs), direct marketers, and OEMs.
Over the past year, ZBRA has surged over 90%, as of November 7. Zebra Technologies Corporation is currently unprofitable, however, sales are improving. The company is continuing to expand its robotics portfolio with new products and services. During ZONE, the company revealed its latest offerings which are embedded with AI, cloud, and machine learning to further advance workflow efficiencies. The latest solutions include the new Zebra Kiosk System and Workcloud Actionable Intelligence 7.0.
In Q3 2024, Zebra Technologies Corporation (NASDAQ:ZBRA) exceeded the expected net sales target and saw a growth of 31.3% year-over-year. Whereas, the company’s services and software recurring revenue businesses grew 4% year-over-year in Q3. With steady revenue growth, the company has been focused on a restructuring approach in recent months to strengthen cash flow and improve net expense savings. For the full year 2024, Zebra Technologies expects to book $60 million in incremental savings and maintain a free cash flow of around $700 million.
Overall, ZBRA ranks 7th on our list of most promising robotics stocks according to hedge funds. While we acknowledge the potential of ZBRA 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 ZBRA 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.