The next big technology opportunity for investors will likely be in sectors that stand to benefit from artificial intelligence and robotics booms, according to panelists at the Wealth Management EDGE conference at The Boca Raton resort in Boca Raton, Fla.
Unitree Robotics, a Chinese company that produces humanoid and quadruped robots, has just been cleared to go public on the Shanghai market. Unitree is the leader in the global robotics market, with a revenue stream of approximately $250 million and the capacity to produce close to 500 robots a month, according to Brendan Ahern, chief investment officer at ETF provider KraneShares, and Teddy Haggerty, founder and CEO of Robostore, a U.S.-based robot producer. Its upcoming public listing should signal to investors where the robotics sector is heading, Haggerty noted.
But Haggerty admitted that the robotics industry is still in its infancy. Today, the primary market for Robostore’s humanoid robots is the education sector, while Fortune 500 companies are just starting to use its products for research and development.
“A lot of our customers are concerned about ‘What do we need to learn to get going?” Haggerty said.
Yet research forecasts that, from 20,000 robots produced last year, the market will reach 1 billion robots and $5 trillion by 2050, Ahern said.
“There will be this exponential scaling, and manufacturers are going to scale really, really quickly,” he said.
As the robotics industry gears up for this growth, however, investors don’t have many opportunities to invest in robotics through public markets, Haggerty said.
What they can do instead is invest in the ecosystem that will eventually support the robotics industry. In order to operate, physical robots need software, a high level of data transfer capacity, leading-edge hardware that has yet to emerge and a growing repair business, among other things. Haggerty predicted that up to 100 companies could go public over the next two years that will have some sort of an edge in robotics.
“As the robotics market grows, all of these companies are going to grow with it because their sales are going to go to robots now, and not just computers, not just data centers,” he said. “And what happens when you have more robots? You need more data centers. So, it’s a huge ecosystem approach.”
This approach is similar to what other panel participants feel is a good way for investors in public markets to capitalize on the current AI boom. While some promising AI companies may never trade publicly, and those that currently plan to go public are looking at eye-watering valuations, Anshul Sharma, chief investment officer at Savvy Wealth, said many industries outside AI itself will see second-order benefits from the boom.
He listed infrastructure, enterprise software, wealth management software and healthcare as sectors that are likely to fall into this category.
This approach of investing in the larger ecosystem would also prevent clients from becoming over-exposed to AI in an environment where “way too many ideas are being funded,” according to Christian Munafo, portfolio manager, private growth strategies, at VanEck.
In their core portfolios, most investors already have a healthy allocation to AI through the mega-cap stocks, Sharma said. Tilting allocations in the rest of the client portfolios toward those other industries, like infrastructure, would allow investors to benefit from the growth without taking on too much risk.
“That’s a way to stay a little more disciplined,” Sharma said.
