3 Robotics Stocks That Could 10X by 2035

Key Concepts

• Robotics Investment: Strategic allocation of capital into companies developing or utilizing robotic technologies.
• "Catching the Wave": A concept, attributed to Jeff Bezos, referring to identifying and investing in the next major technological trend before it becomes mainstream.
• Logistics Automation: The use of robots and automated systems to streamline warehouse operations, including storage, picking, and delivery.
• Warehouse Robotics: Specialized robots designed to operate within warehouse environments, often in controlled settings.
• Software-Defined Robotics: An approach where the intelligence and functionality of robots are primarily driven by advanced software and AI, rather than just hardware capabilities.
• Generative AI for Robotics: Application of generative artificial intelligence models (like large language models) to enable robots to understand environments, plan actions, and solve novel problems without explicit pre-training for every task.
• Industrial Robotics: Robots designed for manufacturing, mining, and other heavy industry applications, often operating in more challenging environments.
• Humanoid Robots: Robots designed to resemble and interact with the world in a human-like manner.
• Controlled Environments in Robotics: Designing the operational environment (e.g., a warehouse) to simplify robot interaction and improve performance, a key strategy for early robotics adoption.
• Hardware vs. Software in Robotics: The distinction between the physical components of a robot and the intelligent systems that control its behavior and decision-making.
• Market Volatility as Opportunity: The perspective that significant fluctuations in a stock's price can indicate market uncertainty, potentially allowing informed investors to buy at a discount.
• Long-term Investment Horizon: A strategy focusing on holding investments for many years (e.g., 10-20 years) to capitalize on fundamental growth and technological shifts, rather than short-term market movements.
• Jetson Thor Platform: Nvidia's advanced AI computing platform specifically designed for robotics and autonomous machines.
• Generative Adversarial Networks (GANs): A class of artificial intelligence algorithms, invented by Google, used in generative AI to create new data instances that resemble the training data.
• DeepMind: Google's AI research lab, where much of its advanced robotics and AI development takes place.
• Waymo: Google's autonomous driving technology development company.
• Android for Robotics: A vision for Google to create a universal operating system for robots, similar to how Android functions for smartphones.

Introduction to Robotics Investment and "Catching the Wave"

The discussion features Kieran from the Fintech Channel, an engineer and consultant with extensive experience in emerging technologies like software, AI, and cloud computing. The core topic is identifying three promising areas for robotics investment, along with specific stock recommendations.

The current investment landscape sees retail investors actively seeking the "next AI" – a technology capable of delivering growth akin to Nvidia's 12x return over five years. This pursuit aligns with Jeff Bezos's concept of "catching the wave," which involves identifying nascent technologies with significant future potential. While acknowledging the inherent risks in speculative, early-stage investments, the conversation emphasizes a long-term investment horizon (10-20 years) for these plays.

Area 1: Logistics and Warehouse Automation (Symbotic)

Kieran identifies logistics and warehouse automation as a key area, focusing on the software driving robots and their industrial applications.

Company Profile: Symbotic (SYM) Symbotic specializes in automating the entire warehouse production process. Their robots handle incoming packages, store them efficiently, and then pick and deliver them to customers.

Market Dynamics and Investment Opportunity Symbotic's stock has experienced extreme volatility, including a 30% drop, a 60% rise, and subsequent declines. Kieran argues that this "all over the place" stock price indicates that "the market doesn't know what this stock should be worth." This uncertainty, he suggests, can present an "opportunity to buy the stock at a discount" for investors who possess a deeper understanding of the company's value. However, he cautions that this volatility also makes it a "fairly risky stock."

Technical and Business Perspective From an engineering standpoint, Kieran notes that new technologies often face initial overestimation, followed by a period where the market discerns which applications truly create value and profit. Symbotic, he believes, falls into the latter category. It's primarily an "automation play," an industry with a long history dating back to the early 1900s. Warehouses and shipping have consistently been at the "bleeding edge" of automation.

Symbotic's value proposition lies in providing Amazon-level automation capabilities to a broader range of companies (smaller, mid-sized, and large enterprises not at Amazon's scale). Amazon itself is known for being "incredibly automated" and leveraging "data analytics and software" for efficiency.

Long-Term Potential and Innovations

1. Controlled Environment Strategy: A major challenge in robotics is enabling robots to interact effectively with the real world. Symbotic addresses this by designing and controlling the warehouse environment itself. This allows them to build robots specifically tailored for this controlled setting, making development easier and creating customer "lock-in" as clients cannot easily switch to different robotic systems.
2. Technology Integration: Symbotic excels at integrating existing advanced technologies rather than inventing them. For instance, they have partnered with Nvidia to utilize their Jetson Thor platform, an AI computing platform for robotics. Evidence of this integration includes their active recruitment of "Jetson Thor experts." This strategy allows them to leverage cutting-edge advancements from other companies.

Area 2: Robotics Software and AI (Google/Alphabet)

Kieran highlights that software remains "one of the hardest parts of robotics." While hardware development has advanced significantly, robots still struggle with understanding their environment, planning, and acting autonomously.

Company Profile: Google (GOOGL/GOOG) Google has been a pioneer in robotics since its inception. Their current focus is on developing advanced AI models specifically designed for robots to tackle complex, novel problems.

Key Innovation: Gemini Robotics Google recently launched a new version of Gemini Robotics. This AI model, similar to large language models like ChatGPT or Gemini for text, is tailored for robots. Its capabilities include:

• Understanding the surrounding world.
• Formulating plans to solve problems.
• Executing those plans. Crucially, Gemini Robotics enables robots to perform these tasks "without having to be trained on a specific task," allowing them to "solve problems they've never seen before." This represents a "huge leap forward" and could become a "multi-trillion dollar business for Google in 10 to 20 years."

Data Moat and Technical Advantage Google invented Generative Adversarial Networks (GANs), the foundational technology behind generative AI. They are now applying this same technology to robotics, but training it on a unique and proprietary dataset. Instead of internet text, they train it on data related to "how robots should interact with the real world, how they can recognize an object, how they know how to reach out, pick it up, and put it somewhere else." This specialized data is "a lot harder to get than just scraping the public internet," creating a significant "moat" for the company.

Investment Impact on Google's Stock

• Short-term (1-2 years): Robotics is unlikely to significantly impact Google's stock price.
• Long-term (5-10 years): Robotics could "dominate the majority of their stock price."
  • Waymo: Google's self-driving car company, Waymo, was estimated by Forbes to potentially become a "trillion-dollar company all on its own."
  • "Android for Robotics": Google has hired the former CTO of Boston Dynamics to lead its robotics research division. Their vision is to create an "Android for robotics" – an operating system that other companies' robot hardware will run on, similar to how Android powers most non-iPhone smartphones. This represents multiple potential "trillion-dollar opportunities."
• Current Status: Robotics development is primarily housed within Google's DeepMind area, still largely in research and development. However, Google has a consistent track record of benefiting significantly from new technologies, including generative AI and cloud computing.

Area 3: Industrial Robotics (Hyundai/Boston Dynamics)

The third area focuses on industrial robotics, which involves robots deployed in challenging environments like mines or manufacturing plants, considered "a little bit harder than logistics."

Key Player: Boston Dynamics Boston Dynamics is a highly recognized robotics company, famous for its "absolutely insane" and "so far ahead" robots like Atlas (humanoid) and Spot (dog-like).

Investment Challenge and Vehicle Boston Dynamics is not a public company. To invest, one must invest in its parent company, Hyundai.

Global Market Trends The vast majority of industrial robots (an estimated 74% last year) are purchased in Asia, with only about 9% going to the Americas. This indicates Asia's significantly heavier investment in this sector.

Ownership History and Hyundai's Strategy

• Boston Dynamics was initially owned by Google, then sold to SoftBank in 2017.
• In 2021, Hyundai, the Korean car company, acquired Boston Dynamics from SoftBank.
• Hyundai's goal is to "commercialize" Boston Dynamics' technological lead. For example, Hyundai plans to order 10,000 Boston Dynamics robots to automate its own production lines, a deal potentially worth $750 million. Given Boston Dynamics' last valuation at $1 billion, this revenue alone could "double or triple their price."

Investment Thesis for Hyundai Investing in Hyundai (a $45 billion company) as a proxy for Boston Dynamics requires two key beliefs:

1. Acceptance of Hyundai as a company.
2. Confidence that Boston Dynamics can grow sufficiently large to "move the needle on Hyundai's stock price." This is a "taller order" and a long-term bet, requiring investors to "hold through an entire auto market cycle" due to Hyundai's current challenges (e.g., a 25% US tariff impacting recent profits). However, Hyundai's VP of engineering has stated that robotics is "one of the most important things" for the company's future differentiation.

Tesla Bot Comparison and Market Perception Kieran draws a comparison to Tesla's "Tesla bot" announcement, which generated significant stock price increases despite being a future promise. In contrast, Boston Dynamics' Atlas robot is an "incredibly advanced" existing humanoid robot, yet Hyundai's stock doesn't see a similar boost. This disparity is attributed to market perception and the complexity of investing in Boston Dynamics through Hyundai. Kieran believes that "ultimately the market will recognize the value" for long-term investors.

Cross-Collaboration with Google Despite Google selling Boston Dynamics, there's significant cross-collaboration. Employees have moved between the two companies (e.g., former Google DeepMind Robotics head at Boston Dynamics, former Boston Dynamics CTO at Google). Boston Dynamics focuses on building robust hardware platforms (like their Spot robot, which functions like a computer with an OS requiring custom code), while Google develops general robotics software. This synergy could lead to a future where "people buy robots hardware from Boston Dynamics that are running Google software." This collaboration is viewed as a positive, not a risk.

Synthesis and Conclusion

The discussion provides a comprehensive, engineer-led perspective on investing in robotics, emphasizing a long-term, data-driven approach to identify genuine value beyond market hype. Kieran's framework breaks down the vast robotics sector into three actionable investment areas:

1. Logistics and Warehouse Automation (Symbotic): Offers an opportunity in a volatile market for a company that controls its operational environment and integrates cutting-edge technology to provide Amazon-level automation to a broader market.
2. Robotics Software and AI (Google): Represents a long-term play on the foundational software and AI that will power future robots, leveraging Google's deep expertise in generative AI and its vision for an "Android for robotics," alongside the potential of Waymo.
3. Industrial Robotics (Hyundai/Boston Dynamics): Provides indirect access to a leading hardware innovator, Boston Dynamics, through its parent company Hyundai, with significant growth potential in the rapidly expanding Asian industrial robotics market.

The overarching takeaway is that while robotics is an emerging and speculative field, a discerning, long-term investment strategy, informed by technical understanding, can uncover significant opportunities. The host's personal choice for a paper trading watch list, Hyundai, underscores the intriguing nature of these indirect, long-term plays in the robotics space.