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 Intuitive Surgical, Inc. (NASDAQ:ISRG) 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 medical team performing minimally invasive surgery with a da Vinci Surgical System.
Intuitive Surgical, Inc. (NASDAQ:ISRG)
Number of Hedge Fund Holders: 67
Intuitive Surgical, Inc. (NASDAQ:ISRG) is one of the most promising healthcare companies that is revolutionizing surgical robotics. The company developed its da Vinci System to assist with minimally invasive surgeries. The company’s da Vinci system has demonstrated positive outcomes across multiple procedures and clinical specialties and in the past three decades, it has performed 14 million procedures. Da Vinci captures a massive 57% of the global market with a key brand presence and competitive advantage.
Intuitive Surgical’s robots are continuously becoming popular for improving minimally invasive procedures. During the Q3 call, the company revealed that its procedure in DaVinci multi-port has a five-year compound annual growth rate (CAGR) of 17%, with nearly 10 million patients treated using DaVinci multi-port in the past five years. By the end of the third quarter of 2024, Intuitive Surgical, Inc. (NASDAQ:ISRG) had installed more than 9,000 systems, with the installed base growing by 14% year-over-year.
Intuitive Surgical, Inc. (NASDAQ:ISRG) seems to have a positive catalyst moving forward as it continues to expand its system installations across hospitals. For now, Intuitive Surgical does not have much competition and the company seems perfect with no debt and a solid $8.3 billion in cash and investments. At the same time, ISRG’s 10-year earnings compound annual growth rate (CAGR) is over 15%, showcasing healthy growth over a long period.
Overall, ISRG ranks 2nd on our list of most promising robotics stocks according to hedge funds. While we acknowledge the potential of ISRG 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 ISRG 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.