Robots automate the world around us and enjoy an impressively diverse range of uses.
But is the industry worth your money? Robotics may be on the rise, but high rates of competition may threaten your investment.
Robotics is the study, design and construction of robots. The field is closely related to many engineering disciplines, including computer science, artificial intelligence and bioengineering.
There are many types of robots, including drones, telepresence devices, self-driving cars, household appliances, toys, industrial machines and so many more. As the field of robotics continues to expand, the more likely we are to encounter robots in our daily lives.
Robotics stocks come from companies involved in the conception or construction of robots. Broadly speaking, they include:
There are several ways you can invest in robotics stocks. You can buy shares of individual robotics stocks. You can also purchase shares of an ETF that invests in several stocks. Here’s how to start:
The robotics industry is growing in Canada, the US and internationally. Investors can select from stocks traded directly on Canadian and US exchanges or purchase over-the-counter shares from international companies.
There are a number of user-friendly platforms like Wealthsimple and Scotia iTRADE that provide access to both Canadian and US stocks. However, you may need a more advanced trading platform like Interactive Brokers to access OTC Markets and stock exchanges in other countries.
To purchase these stocks, you’ll need an international share trading account.
Most ETFs that track robotics companies also have an eye on the artificial intelligence industry.
It’s hard to argue against the excitement of investing in the tech sector. And the robotics industry in particular presents an enticing opportunity for investors.
There’s a lot of long-term growth potential in robotics. Like artificial intelligence, the robotics industry is on an impressive growth trajectory.
From 2018 to 2026, the robotics industry is expected to grow by about 11% per year, according to the 2020 Global Industrial Robotics Market Analysis. The sweeping practical applications of this technology seem endless including uses in healthcare, industrial assembly, military, automotive, consumer goods.
Robotics stocks also offer investors the opportunity to back a technology they may actually benefit from like surgical robots, disaster-response robots or farming robots.
There are 2 risks to consider before you invest in robotics stocks: competition and company valuations.
Market sectors poised for growth hold plenty of investment potential but tend to experience higher rates of competition. And competition can be cutthroat — especially for newly hatched startups that lack the capital and resources of better-established companies.
And the other major risk factor associated with robotics stocks plays into the first: high company valuations. It’s no secret that the robotics industry is on an upward trajectory, and the market has adjusted in response. Like many other industries in this sector, robotics stocks can get expensive, and that’s a result of the higher valuations associated with companies in this industry.
The bottom line? Investors risk pouring funds into an expensive stock only to watch the company flounder amid competition.
To invest, you’ll need a brokerage account. Explore your options below.
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The field of robotics is growing and there are many ways to apply the technology. But the price of investing in robotics may be higher than investors are willing to risk on such a competitive industry.
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