The future is full of the impossibilities of today and yesterday. This becomes evident as we witness achievements once deemed unattainable. After all, landing on the moon was considered impossible. Today, humans aspire to explore planets beyond the moon while continuing to develop artificial intelligence (AI) and robots. When one thinks of robots, numerous sci-fi movies like Terminator, I, Robot, The Creator, Ex Machina, and many others come to mind. What once seemed like pure fantasy is now inching closer to reality as corporations work tirelessly to turn impossibilities into tangible outcomes.
Advancements in robotics and AI are transforming science fiction dreams into reality. As corporations innovate across various industries, this growing sector offers significant opportunities for long-term growth and returns.
At the annual CES 2025, a prominent technology conference, Nvidia’s CEO unveiled plans to expand beyond data center AI technology. Nvidia, a key player in AI and among the largest holdings of the EasyETFs AI World AMETF, is one of the most widely held companies in the U.S. stock market. Nvidia showcased its Cosmos foundation models, designed to create photo-realistic videos for training robots and self-driving vehicles.
Overview
Robotics and AI are revolutionizing industries such as healthcare and space exploration. The global robotics market is projected to grow by 15.1 percent annually, reaching $169.8 billion by 2032. James Lambert of Oxford Economics highlights the sustained investment in this field, driven by productivity gains and growth potential.
Declining costs and improved technology are fueling the rise of industrial robotics. Collaborative robot (cobot) sales are expected to increase by 6,100 percent by 2045, with significant growth areas including packaging and palletizing in the food and beverage sector.
Robotics
iRobot Corporation, a leading designer and builder of consumer robots, is best known for its Roomba vacuum-cleaning robots. Its latest results showcase how the company is benefiting from lower costs in the robotics space.
The company reported a 590-basis-point (or 5.90%) year-over-year increase in non-GAAP gross margin for Q3, driven by restructuring and iRobot Elevate initiatives. GAAP gross margin increased by 6.40%. As of September 28, 2024, cash and equivalents were $99.4 million, down from $108.5 million at the end of Q2. Restricted cash for loan repayment totaled $41.1 million, including $40.0 million drawn in Q3. Inventory decreased from $244.5 million at the end of Q3 2023 to $149.2 million.
The CEO stated: “Our ongoing restructuring has fundamentally changed the way we innovate, develop, and build our robots… With the benefit of lower operating costs, we expect to enhance margins and improve profitability in 2025.”
For 2025, iRobot anticipates year-over-year growth, with stronger performance in the second half as new products are introduced. Lower costs and faster development cycles are expected to improve margins and profitability. “We remain on schedule with our product launches planned for 2025, designed to excite consumers with feature-rich robots and improve the overall product experience,” the CEO added.
Artificial Intelligence
Appen, an Australian leader in AI data, focuses on ethics and impact in language models and deep learning. In 2024, Google ended its multi-million-dollar contract with Appen, which had trained AI tools for products like Search and Bard. However, Appen has also collaborated with Amazon, Meta, and Microsoft on AI model training.
Q3 FY24 revenue reached $54.1 million, down 13% due to a $21.9 million decline in Google-related revenue from the previous year. However, revenue excluding Google grew by 35%, driven by generative AI projects in China and a global customer. Gross margin rose to 41%, a 7.6% increase from the prior year.
“We’re continuing to experience LLM-related growth, which is contributing to our positive revenue trajectory. China continues to experience significant growth, and we remain confident in the potential of our Enterprise and Government divisions,” the CEO noted.
In the 2024 review, the CEO emphasized that as AI adoption accelerates, Appen’s role in delivering high-quality, human-sourced data is more critical than ever. Appen is expected to announce its full-year 2024 results on February 26, 2025.
Conclusion
The rise of robotics and AI signifies immense opportunity but also demands careful consideration. Companies like Nvidia, iRobot, and Appen highlight the transformative potential of these technologies, from industrial automation and autonomous vehicles to advanced AI model training. The projected growth of the global robotics market and the increasing demand for AI-driven solutions underscore the sector’s long-term appeal. Meanwhile, OpenAI, the owner of ChatGPT, announced plans in 2024 to transition to a for-profit model by 2025. This includes establishing a public benefit corporation and listing shares to enable high-growth startup operations while easing nonprofit restrictions - another signal for potential growth in the AI & robotics space? 👀💭
However, investors should remain vigilant. Competitive dynamics, regulatory challenges, and financial stability are critical factors to consider. Nvidia is a leader in innovation, but Appen’s recent revenue dip due to the loss of a major client illustrates the risks of overreliance. Meanwhile, iRobot’s cost-reduction efforts may take time to yield consistent results. Diversified holdings, close monitoring of trends, and prioritization of adaptable companies with robust growth strategies will be essential in this rapidly evolving sector.
Any opinions, news, research, reports, analyses, prices, or other information contained within this research is provided by an employee of EasyEquities an authorised FSP (FSP no 22588) as general market commentary and does not constitute investment advice for the purposes of the Financial Advisory and Intermediary Services Act, 2002. First World Trader (Pty) Ltd t/a EasyEquities (“EasyEquities”) does not warrant the correctness, accuracy, timeliness, reliability or completeness of any information (i) contained within this research and (ii) received from third party data providers. You must rely solely upon your own judgment in all aspects of your investment and/or trading decisions and all investments and/or trades are made at your own risk. EasyEquities (including any of their employees) will not accept any liability for any direct or indirect loss or damage, including without limitation, any loss of profit, which may arise directly or indirectly from use of or reliance on the market commentary. The content contained within is subject to change at any time without notice.