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In this article we present the top 10 robotics and artificial intelligence stocks to buy. Click to skip ahead and see the top 5 robotics and artificial intelligence stocks to buy.
What are the best robotics and artificial intelligence stocks to buy today? In this time of uncertainty characterized by volatile market movements, economic contraction, and spiraling unemployment, finding stocks to put your money into seems like an arduous task. Some investors might think that the stock market is acting irrationally and puzzled by the quick recovery of stock prices since the end of March. The market's movements isn't far away from economic realities. Economic reality is that long-term real interest rates are negative, the Federal Reserve is flooding the market with cheap credit, and the current economic slowdown is temporary. Once the elections are over, we will also see a large economic stimulus package pushing the markets into new highs.
This is the perfect environment to buy technology stocks which aren't negatively affected by the coronavirus induced lockdowns and economic slowdown. In this article we are going to take a look at the top 10 robotics and artificial intelligence stocks to buy using a hedge fund sentiment indicator. We are on the cusp of a technological revolution that will fundamentally change how we live our lives. Recent advancements in machine learning and artificial intelligence will open the door to robots, driving cars, and many other inventions that we can't even imagine today. So, we decided to take a look at the best robotics and AI stocks to buy in order to generate high returns as the companies bring new products in to the marketplace.
In order to compile this list of best robotics and AI stocks to buy we started with the entire holdings of the Global X Robotics & Artificial Intelligence ETF (BOTZ). According to its website this ETF "seeks to invest in companies that potentially stand to benefit from increased adoption and utilization of robotics and artificial intelligence (AI), including those involved with industrial robotics and automation, non-industrial robots, and autonomous vehicles". We also considered the top 10 holdings of ARK Autonomous Technology & Robotics ETF (ARKQ). There were a total of 42 stocks that are classified as "artificial intelligence stocks" by these two ETFs. We ranked these 42 stocks by hedge fund popularity.
We use hedge fund sentiment as a litmus test to gauge the profitability of potential investment ideas and to predict the trajectory of market. Research carried out by Insider Monkey has shown that a select group of hedge fund holdings have consistently outperformed the S&P 500 ETFs. For instance, our monthly newsletter's portfolio of stock picks beat the market by more than 66 percentage points since March 2017 (see the details here). As such, hedge fund sentiment is undoubtedly a useful indicator that investors should pay attention to. You can subscribe to our free enewsletter below to receive our stories in your inbox:
Based on our hedge fund sentiment data, we present 10 most popular robotics and AI stocks among the 800+ hedge funds tracked by Insider Monkey.
10. iRobot Corporation (NASDAQ: IRBT)
iRobot Corporation (NASDAQ: IRBT) is a robotics company with a market capitalization of $2.4bn. Its share price has increased by more than 75% this year. iRobot Corporation (NASDAQ: IRBT) maintained its earnings streak in the second quarter of 2020, reporting earnings of $1.06 per share. IRBT has a trailing P/E of less than 16, according to Yahoo Finance.
It is no surprise that the company is in the portfolio of 22 hedge funds, an increase of 3 since the first quarter. Quant hedge fund Two Sigma has the biggest equity position in IRBT in our database. We made a bullish call on IRBT 2.5 years ago in this article titled "Rise of the Machines: Why It's Time To Invest in Robots".
9. 2U, Inc. (NASDAQ:TWOU)
2U is an education technology company providing front-end and back-end cloud-based SaaS technology services to Universities. In August 2U, Inc. and Columbia Engineering announced a "partnership to deliver the Columbia Artificial Intelligence Program". The $2.7 billion market cap company aims to be a leader in the digital transformation of the higher education market.
2U Inc was in the portfolios of 24 hedge funds at the end of June. That figure was only 14 at the end of March. Quant hedge funds D.E. Shaw and Two Sigma are among the top 3 hedge funds with bullish TWOU bets. Greenvale Capital initiated the biggest new position in TWOU among the hedge funds tracked by Insider Monkey. TWOU shares returned more than 55% so far in 2020.
8. Trimble Inc. (NASDAQ:TRMB)
Trimble looks like an old school industrial equipment company that is trying to pivot to a software subscription business. Last week Boston Dynamics and Trimble announced a strategic alliance to combine Boston Dynamics' Spot robot platform "with Trimble's data collection sensors and field control software to enable automation of repetitive tasks such as site scans, surveying and progress monitoring". Trimble's ultimate goal is to disrupt the construction market.
TRMB was in the portfolios of 26 hedge funds at the end of June, an increase of 6 over the previous 3 month period. Al Gore's Generation Investment Management was the largest shareholder of this robotics company, with a stake worth $495 million reported as of the end of June. Trailing Generation Investment Management was Impax Asset Management with a stake valued at $350 million. D E Shaw, Arrowstreet Capital, and Citadel Investment Group were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Impax Asset Management allocated the biggest weight to Trimble Inc. (NASDAQ:TRMB), around 3.6% of its 13F portfolio.
7. Deere & Company (NYSE:DE)
Deere is another top 10 robotics stock pick from ARK Autonomous Technology & Robotics ETF (ARKQ). There were a total of 23 hedge funds with bullish Deere positions at the end of June. We have to tell you that not every active fund manager is bullish on this stock. Massif Capital disclosed in its Q1 investor letter that it is shorting Deere and said the following:
“John Deere continues to excel at setting and surpassing their own quarterly expectations. The market rewards them for doing so; their stock appreciated ~7% on the day they announced earnings, even as their underlying financials paint a rather bleak picture. Messaging from senior management focused on the stabilization of the U.S. agriculture industry. The passing of the USMCA and the Phase I trade deal last fall certainly put some life back into their sails, even if it’s not at all clear how accretive this is for the U.S. farmer, let along DE’s income statement. Compared to 2018, DE’s first quarter 2020 net sales (which concluded on January 31 and did not incorporate any of the COVID19 effects) fell 6%, led by their agriculture & turf division falling 4%, construction & forestry falling 10% all balanced out by their financial services division gaining 9%. Total operating profit for the firm fell 16% year-over-year, primarily driven by a sharp 59% drop in the operating profit from construction & forestry.
Deere’s headline acquisition of Wirtigen in 2018 seems to be causing more headwinds than tailwinds thus far. The firm’s 2020 outlook does not provide much relief. Prior to the knowledge that the pandemic would effectively press pause on economic activity for an unknown period of time, both their agriculture and construction divisions were expecting sales to contract 10-15%.”
6. Intuitive Surgical, Inc. (NASDAQ: ISRG)
Intuitive Surgical, Inc. (NASDAQ: ISRG) is known for its da Vinci surgical systems in the United States and internationally. The company has a market capitalization of $85 billion. This yeas alone, shares of Intuitive Surgical, Inc. (NASDAQ: ISRG) have increased by more than 23%.
Even though the number of elective surgeries as well as diagnostic procedures declined significantly because of the coronavirus pandemic, ISRG reported adjusted EPS of $1.11 for the second quarter and $2.77 for the third quarter. We expect ISRG to earn closer to $10 in 2020, giving it a P/E ratio of 72.
Fifty hedge funds had bullish positions in Intuitive Surgical, Inc. (NASDAQ: ISRG) at the end of the first quarter. That number declined to 43 by the end of the second quarter. The top 3 hedge fund holders of ISRG are all billionaires.
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Disclosure: None. This article is originally published at Insider Monkey.