ROBO Global released a worldwide outlook report for 2019 that highlighted that artificial intelligence (AI) and robotics will act as a catalyst to create a “wave of new opportunities” this year.
“Machine learning and artificial intelligence have been making headlines for the past few years, enabling everything from self-driving cars to a champion computer chess player. But at long last, the practical value of machine learning is being realized,” said the report.
Banks are using machine learning which is a subset of AI to identify suspicious activity in real time and prevent fraud, according to the report. Retailers are also using it to personalize customer experiences and boost supply chains.
“2019 will be the year edge computing enables machine learning to reach beyond the data centers and the Cloud to play a key role in getting intelligence into robots out in the field,” said the report.
Market intelligence firm Tractica forecasts that the revenue generated from the direct and indirect application of artificial intelligence software will grow to $105.8 billion by 2025 from $5.4 billion in 2017, representing a compound annual growth rate of nearly 45%.
“There is a lot of disruptive technology coming into healthcare. It will drive better patient outcomes,” Richard Lightbound, ROBO Global CEO EMEA & Asia, told Proactive London’s Andrew Scott.
Health care accounts for 10% of the ROBO Index, with a focus on robotics guidance and surgery, laboratory automation, genomics, and AI healthcare applications. The sector returned more than 21% in the first 11 months of 2018.
“Artificial intelligence is already driving revolutionary change in the medical field. But this does not mean that doctors will be replaced by medical robots. Far from it,” said ROBO Global CIO and President William Studebaker. “Instead, AI will continue to bolster the capabilities of physicians and the medical devices and machines they use every day to deliver better patient outcomes.”
ROBO Global says that there will be continued investments in robotics and artificial intelligence, as well as a new wave of M&A by traditional health care companies in the medical device and instrument arena as they seek new avenues for growth.
In 2018, spine robotics surgery pioneer Mazor Robotics — which has been the best performing constituent of the ROBO Index in the past three years — agreed to be acquired by Medtronic PLC’s (NYSE:MDT) for over $1.6 billion.
Index component Globus Medical Inc (NYSE:GMED) is also making headway in this area, driving significant technological advancements across a complete suite of spinal products.
Intuitive Surgical ((NASDAQ:ISRG) is also an early component of the ROBO index.
In the ROBO world pure-play stocks — companies such as Intuitive Surgical and iRobot Corp (NASDAQ:IRBT) — have an approximate 2% weighting in the 87-strong ROBO index. The hybrids are individually at about 1%.
“In 2019, we expect another year of double-digit EPS growth as industrial and factory automation markets bottom out before summer, and structural growth in demand continues across a variety of other robotics, automation and artificial intelligence (RAAI) technologies such as sensing, computing, and AI, and applications including logistics, healthcare, and 3D printing, among others,” said the report.
To put it into perspective, the benchmark ROBO index is to the robotics, automation and artificial intelligence universe what the Morgan Stanley Capital International (MSCI) Index is to investors who want an exposure to emerging markets.
The ROBO index is used as a performance benchmark for funds and market growth. Since it’s the first major index in the robotics, automation and AI space, the ROBO index has several low-cost ETFs tied to it at the hip.
ROBO Global provides its expertise to the ROBO Global Robotics and Automation Index ETF (NYSEARCA:ROBO) which was trading flat at $35 on Tuesday.
Contact Uttara Choudhury at [email protected]