Each week, a professional investor tells us where he’d put his money. This week: Tom Riley, AXA Framlington Robotech Fund.
Given the pace at which the industry is expanding, and is expected to do so in the future, I believe that the robotic revolution will continue to unfold at an accelerated rate over the coming decades. Robots are already capable of performing sophisticated, delicate work, as well as working alongside humans to improve productivity. They’re also becoming more affordable and easier to programme, which is happening at the same time as labour costs are rising in both developed and emerging markets, while working populations are shrinking in many manufacturing countries (such as China). These trends, along with developments in areas such as vision systems and artificial intelligence, will support the increasing adoption of robotics.
Within the healthcare sector the market for robotic surgery is growing sharply. This technology offers many advantages for both patients and hospitals. More precise surgeries – enabled by robotic assistance – can reduce the risk of infection and speed up recovery times. Intuitive Surgical (Nasdaq: ISRG), is a $35bn company that specialises in the manufacturing and marketing of the Da Vinci surgical robotic system. It appears to be enjoying something of a dominant position in the sector – over the past two years, its average annual growth has reached some 13%. The Da Vinci robots performed more than 750,000 surgical procedures in 2016, and we believe that this is set to grow as robotic surgery continues to gain traction and the range of procedures for which it can be used continues to broaden.
The robotics industry has been making inroads into the transportation sector for some time. Robots are becoming increasingly vocal backseat drivers, and will soon move into the driver’s seat via the increased usage of vision and sensor systems. Teams at Waymo, the self-driving car division of Alphabet (Nasdaq: GOOG), drive more than 25,000 autonomous miles each week, largely on complex city streets in the US. The fleet has self-driven more than three million miles, and that’s on top of the one billion simulated miles driven in 2016. With each mile, the firm collects more data and experience, enabling it to keep learning and improving the driving process.
The ever-increasing sophistication of robotics systems is likely to prove a boon for many factories, helping them to drive further efficiency and productivity gains. One particularly interesting company on this front is vision technologies firm Cognex (Nasdaq: CGNX). The $8bn corporation creates vision systems used in the automation of manufacturing and logistics facilities. We invested in the firm in 2015 as we started to see more sophisticated vision systems increasingly being incorporated into the manufacturing and assembly processes. The firm has reported annualised average sales growth of around 14% over the past three years, and it boasts an encouraging pipeline for the future, as its business moves into new sectors.