AI contributed significantly to market performance in 2023. Indeed, in some ways, AI rode in to rescue numerous firms this time last year when analysts were expecting disappointing numbers. AI offers more than just a near term boost for tech companies and office jobs that could benefit from a productivity boost, however. The secular case involves both AI and Robotics investing as a key long-term theme.
AI and Robotics Investing was a key focus of a recent VettaFi webinar sponsored by Exchange Traded Concepts, ETC. Hosted by VettaFi head of research Todd Rosenbluth, the “Automation, AI, Factories, and the Future of Robotics” webinar included two intriguing panelists: ETC’s VP of National Accounts & Sales Shachi Merchant and VettaFi senior research analyst Zeno Mercer.
The discussion not only touched on AI and robotics investing, but also the broader theme of robotics and overall automation. The discussion examined, for example, whether robotics might be the next sector to benefit significantly from generative AI.
Robotics and AI Investing in ROBO
Robotics enters 2024 in a somewhat similar scenario to AI and computer chips in the second half of 2022. The ROBO Global Robotics & Automation Index ETF (ROBO ) has a solid forward P/E ratio that markets may be missing out on at 24.3, for example.
At the same time, supportive government policies like the CHIPS Act and the IRA could boost a solid macro picture. The robotics space may be impacted by a cyclical bottom, but the upside is there. The U.S. economy may have fallen behind in robotics, but that leaves plenty of space to grow.
“There isn’t necessarily a ChatGPT moment for robotics right now, but a lot of technologies are coming together,” Mercer said. “We’re starting to see some technologies converge, where the task building and reverse engineering of task flows become really easy.”
For example, Mercer shared, Google (GOOGL) recently announced the new Aloha mobile robot assistant, which would rely on AI to some degree.
ROBO itself presents one intriguing route into the AI and robotics investing idea. Tracking the ROBO Global Robotics and Automation TR Index for a 95 basis point (bps) fee, the strategy uses quantitative and qualitative research to look for firms providing devices or sensors for any type of robot, artificial intelligence, unmanned vehicles, 3D printers and navigation systems.
Hitting its 10th anniversary last year, the ETF has returned 23% over the last three months. With AI only growing in economic influence, looking at its intersection with robotics could be an intriguing play this year.
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VettaFi LLC (“VettaFi”) is the index provider for ROBO, for which it receives an index licensing fee. However, ROBO is not issued, sponsored, endorsed or sold by VettaFi, and VettaFi has no obligation or liability in connection with the issuance, administration, marketing, or trading of ROBO.