The robot revolution is well underway and only growing in size and scope. Increasingly, robots are being used to help with everything from cleaning our floors to performing medical procedures. It appears as if the futuristic growth potential of robotics has no end in sight.
Robots have become so pervasive that many of us today are unaware of how they’ve infiltrated our daily lives, helping to park our cars and adjust the temperature in our homes. Today, the robotics industry is worth $35 billion and growing, according to market research firm Statista. Service robots that aid consumers and homeowners are the biggest segment of the robotics market, generating $26 billion in annual revenue.
Going forward, robots are expected to become even more prevalent in our daily lives, especially as artificial intelligence (AI) explodes. Here are the top three robotics companies to invest in.
Digital personal assistants, delivery drones and iRobot (NASDAQ:IRBT) are a few of the reasons why investors should view e-commerce giant Amazon (NASDAQ:AMZN) as a robotics company. Increasingly, Amazon is turning to robots, whether to locate and pack items at its fulfillment centers or to sell to consumers for use in their homes. Amazon has bid $1.7 billion to acquire iRobot, the company behind the popular robotic vacuum cleaner called Roomba. That deal is currently awaiting regulatory approval.
Clearly, Amazon sees robots as a big part of its future, both to drive productivity and sales. The adoption of robots could increase as AI is integrated into more machines, making them even more capable and productive. For investors, the push into robotics is yet another reason to take a position in a leading tech company whose stock is available at bargain basement prices right now. AMZN stock is down 18% over the last 12 months and nearly 30% below its 52-week high of $146.57. Buy the dip.
Speaking of iRobot (NASDAQ:IRBT), investors looking for big gains in robotics stocks might want to take a position in the core robotics company’s stock before the Amazon purchase is completed. Currently, IRBT stock is trading 65% below the $61 per share price that Amazon has agreed to pay shareholders for the company. That means an investment made in iRobot today would result in a 65% profit for investors once the deal closes. How likely is it that the deal will be approved by regulators? While not a slam dunk, it does have a reasonable chance of getting the green-light.
The $1.7 billion price tag on the iRobot acquisition is negligible to Amazon. Plus, acquiring IRBT will not give the e-commerce company an excessively large share of the robotics market. The main issue is that the Roomba vacuum cleaners could give Amazon data on consumers’ homes, their interiors, and their lifestyles. While those concerns might be overblown given the focus of the Roomba on cleaning floors, the worries have nevertheless pushed IRBT stock down 34% in the last 12 months, setting up what could be a nice merger arbitrage.
Intuitive Surgical (ISRG)
Medical device company Intuitive Surgical (NASDAQ:ISRG) has been on a tear lately. In the past six months, ISRG stock has rallied 26% and is now trading near its 52-week high. The company is surfing a wave of strong earnings and robust sales of its da Vinci surgical system. The Covid-19 pandemic created a surgical backlog that is now unwinding big time, driving sales for the company upwards. Over the past five years, ISRG stock has nearly doubled.
Sales are particularly strong for the surgical instruments and accessories that are used with the da Vinci system. Da Vinci uses robotics to carry out minimally invasive surgical procedures on the heart, and to remove all or part of the prostate gland. ISRG stock recently jumped 10% after the company’s first-quarter earnings beat analysts’ consensus forecasts. EPS increased 8.8% from a year earlier and sales of the da Vinci surgical system rose 12%. The company now boasts an installed base of 7,779 platforms worldwide.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.