Robotic renaissance: investing in automation

Key takeaways:

• Industrial robots have been around for decades but the pace of innovation in robotics is accelerating rapidly due to the convergence of disruptive technologies including 5G, artificial intelligence (AI), and cloud computing.
• The industry’s growth may be driven by demand created by megatrends such as e-commerce, electric vehicles (EVs), and precision healthcare.
• Invesco QQQ provides exposure to several companies from multiple industries and sectors that are emerging as automation and robotics leaders.

There was a time when intelligent robots were possible only in movies. Now they’re very much part of our everyday lives. Industrial robots serve many functions today, including automobile assembly lines, loading delivery trucks, and even automated vacuum cleaning.

Those are the familiar avenues through which robots are deployed, but there’s more to the story. Automation and robots are receiving renewed attention from corporate customers and businesses alike looking to avoid supply chain disruptions.

That’s one reason why industrial robotics revenue is forecast to grow 5% to 7% annually over the next four years. Additionally, the cost of those robots is expected to decline 3% per year over that same period, indicating barriers to adoption are falling.¹

Invesco QQQ ETF, which tracks the Nasdaq-100 Index, is home to several companies that are purveyors of automation and robotics services and technologies. QQQ also holds companies that produce components and gear needed to drive those offerings as well as firms that are potential beneficiaries of increased automation and robotics adoption.

Robots need chips

As is the case with so many disruptive technologies, automation and robotics are semiconductor intensive. Robots require cutting-edge computing power so they can process their environment and execute complex tasks. Semiconductors are to robots what brains are to humans.

Therefore, it’s no surprise that semiconductor leader and QQQ holding Nvidia provides some exposure to robotics through its dominating presence in graphics processing units (GPUs) and AI technology. Nvidia also has the Jetson computing boards designed for embedded AI computing in autonomous machines, including robots. Users of the Jetson platform include Nvidia customers like Amazon, Cisco, and Pepsico – all of which are QQQ holdings.

Qualcomm is another example of a semiconductor manufacturer with an increasing robotics footprint. The company’s Robotics RB6 platform powers next-gen robots in defense and sophisticated industrial manufacturing applications.

Other semiconductor names currently in QQQ’s portfolio include Broadcom, Advanced Micro Devices, and Applied Materials.

A healthy outlook for healthcare robots and automation

Automation and robotics end markets such as AI, cloud computing, defense, and electric vehicles seemingly overshadow the healthcare opportunity set, but that sector is a potential epicenter of robotics adoption.

Robots produced by companies including QQQ holding Intuitive Surgical are already performing complex surgeries, often reducing patient risk and improving outcomes in the process. In 2020 it was estimated that only 3% of surgeries performed around the world were executed by robots,² indicating there’s significant runway for growth.

Then there’s the administrative side of healthcare. It’s estimated that administrative tasks represent 25% of all healthcare spending, but improved automation could reduce that by as much as 30%.³ The potential savings by way of increased automation could be massive for clinicians, healthcare systems, and patients alike.

Healthcare robots represent opportunity on another front. These robots can alleviate nurses of some of the more mundane though time-consuming tasks, such as medicine delivery and sample collection, associated with the job. The ability of nursing robots to pick up the slack is pivotal at a time when the U.S. is facing a steep nursing shortage – one that’s been fostered in part by burnout and tedious tasks.⁴

QQQ provides diverse access to automation, robotics

Invesco QQQ ETF provides access to a broad swath of cutting-edge companies and features an extensive list of robotics-related names.

In addition to the companies mentioned here, Facebook parent Meta Platforms is developing AI robotics based on human interactions. Honeywell International, another QQQ holding, has been a leader for more than two decades, developing AI-powered robots for logistics and transportation customers. Humanoid robots like Tesla’s Optimus are already performing surprisingly complex human tasks and movements.

QQQ’s exposure to the automation and robotics investing theme is just another example of how the ETF holds many companies pushing the boundaries of fast-growing, disruptive technologies.