Investors are changing their sentiment when it comes to investing in artificial intelligence (AI) despite the market experiencing significant performance during the last couple of months. Instead, many have found another way to make better strides in the AI market besides investing in semiconductor big leagues and Wall Street sweetheart NVIDIA Corp (NASDAQ:NVDA). Nvidia has been a major winner, but is flat since June, and its hot streak could be ending. However, there are other ways to profit off the AI boon.
Robotic stocks have for quite some time been gaining major traction on the stock market as new developments are helping leading companies break into this pocket of the tech sector. Robotic stocks and their respective companies are involved in various operations, working as cross-functional solutions in a mirage of industries.
A close-up of a colorful high-end graphics card being plugged in to a gaming computer.
From healthcare, autonomous vehicles, space exploration, and renewable energy infrastructure, robotic systems are building a compelling case for the future developments of artificial technology and digital equipment.
For some investors, this could be the switch-up their portfolios need amid a wider market shift. Future forecasts expect spending on robotic systems development to reach stratospheric levels, as competition in the industry increases and new automation developments, in collaboration with artificial intelligence, breaks ground.
This year alone the AI robotics market has grown by 30%, compared to 2023. Experts expect that the market will see a nearly 20% annual growth until 2030. With growing potential, now might be a pleasant time for investors to get a head start on the robotics industry.
Intuitive Surgical, Inc.
First on the list is the all-American biotechnology company, Intuitive Surgical (NASDAQ:ISRG). The Sunnyvale, California-based company develops, markets, and distributes robotic systems used in healthcare, which in turn helps to improve clinical patient outcomes.
Intuitive Surgical is best known for its development of the da Vinci Surgical System, a highly sophisticated robotic system that allows surgeons to perform and complete minimally invasive procedures. In the last earrings quarter, the company reported that global da Vinci procedures had increased by 17% compared to the same period last year. Across the world, the company has installed a base of 9,203 da Vinci systems.
In addition to this, third quarter earnings results showed that the company had experienced another strong quarterly performance, with revenue of $2.04 billion up 16.88% quarter-over-quarter, and net income of $565.10 million rose 35.94% compared to the previous quarter. Globally, da Vinci procedures increased 18% compared to Q3 2023, while revenue across most product and service categories grew during the quarter.
The positive quarterly results helped push share prices further north, with ISRG gaining over 10% in post quarterly earnings trading. Shares have gained 56% year to date, which is double the year-to-date performance of the bench S&P 500 which is up 22.98% since the turn of the year through October 30.
The company has plenty to gain from developments on the AI front. Adoption of minimally invasive surgeries is becoming a growing trend across much of the world. Not only this, but self-automated home-based care is making a mark on the industry, which could help place Intuitive at the forefront.
There are however some aspects that could impact top-line growth. For starters, Intuitive might face off with rising competition in the market, as new startups are rushing to jump on the AI-robotics bandwagon. Next to this, slower adoption in key regions in Asia could hamper near-term growth and further slow down the rollout of systems.
Zebra Technologies Corp.
Next up is Zebra Technologies (NASDAQ:ZBRA) which manufactures and sells tracking, marking, and computer printing technologies. Despite a surge in online media taking the internet by storm, traditional legacy printing systems are still relevant, however, Zebra is entirely changing the game.
The company develops digital products that are used in computers and other electronic devices such as tablets. Additional software systems, also created by Zebra Technologies can help businesses create and print thermal barcode labels, and provide autonomous mobile robotic functionality for industrial hardware and software.
Zebra has been pacing the year on a solid footing, with shares of the company rising a robust 43.55% year to date. On the back of growing optimism regarding the future of artificial technology, ZBRA recently climbed to a 52-week high at $384.68.
A closer look at the third quarter earnings results showed that the company has remained in a positive territory. For one, revenue of $1.22 billion increased 0.25% during the period, while the company reported $1.25 billion in net sales which represented a year-over-year improvement of 31.3%.
Additionally, the company reported $137 million in net income and net income per diluted share of $2.64. Zebra has been making some structural and expense changes in recent months, as they look to build a more robust financial foundation, while increasing revenue margins.
Though revenue growth has been slower, the company has undertaken a restructuring approach in recent months in an attempt to bolster cash flow and improve net expense savings. In Q3, Zebra reported $120 million in annualized net expense savings, which is currently within the company’s benchmark. In total, the company expects to book $60 million in incremental savings for the full year 2024 and free cash flow of $700 million.
On a positive note, Zebra could benefit from improved product demand within the enterprise sector. Demand in e-commerce could also help bolster performance, as mobile computing becomes increasingly important in a sector that’s moving away from legacy systems, and instead seeking to leverage autonomous tools.
PTC Inc
Last on the list is the Boston-based computer software and services company, PTC Inc (NASDAQ:PTC). The company has a long track record of developing and distributing parametric and associative technologies which has largely been used in designing and modeling software.
In more recent years, the company has shifted focus towards the various services embedded within the Internet of Things (IoT) including augmented reality (AR). Competition in these arenas has steadily been growing, which has seen the company rapidly adapt to a changing consumer and commercial market.
Performance of PTC shares have been all over the board this year, and zig-zagging across the market. Shares started the year on a strong note adding approximately 11% within the first three weeks of January. From there on out, performance was largely up and down, with shares peaking near the end of March before slipping back down again.
Overall, year-to-date performance has remained steady, with shares adding nearly 12.29% since the beginning of 2024. Impressively, shares have regained their footing after a massive sell-off that brushed over much of the tech industry during the opening days of September. Shares were down 8.00% before making a strong rebound, and have gained 14.92% since the decline.
Financials are reflecting steady performance, however year over year revenue on a constant currency basis had declined 3%. In total, the company reported $518.64 million in revenue for the third quarter, which was slightly down compared to the reported $542.00 million in the same quarter last year.
Still, on a positive note, the company reported that guidance of 11%-12% constant currency growth remains on track and PTC continues to maintain free cash flow guidance for the full year 2024. Though there have been some difficulties throughout the year, PTC is expected to see improved financial performance in the coming months, as current delivery remains within full-year guidance.
PTC is currently on a “Hold” basis, according to Zacks Rankings. Looking forward, this could change again, however, sentiment might suggest that investors should consider buying while prices are in a swing state and leverage a possible low-hanging fruit.
Closing Thoughts
There has been a lot of activity shaping the robotics market, and plenty of new developments are creating exciting opportunities for investors who were late to the party. Perhaps the collaboration between artificial intelligence could give robotics a more prominent boost and help bring these companies into the spotlight.
As momentum continues to pick up, perhaps the coming months will present investors with a more attractive approach that can help them shift their opinion over the robotics industry. Picking the right companies will be crucial, as not everyone will be winners. However, for the lucky few, this could be a turning point that could help pivot the industry.
While we acknowledge the potential of NVDA, our conviction lies in the belief that some 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 NVDA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclaimer: This is not investment advice. Speak to a professional before any investing decisions.
Disclosure: No positions in any stocks mentioned.
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