Investing in the robotics and artificial intelligence (AI) sectors could prove to be profitable over the long term.
Although robotics is still in its early stages, analysts from ResearchAndMarkets project the global robotics market will grow at a compounded annual growth rate (CAGR) of 4.9% until 2026. Last year, the sector was worth roughly $50 billion and at that rate of compounding, it could be worth more than $65 billion in just five years. AI is further ahead, with the global market worth more than $62 billion last year, according to data from Grand View Research. And analysts there expect the industry to grow at a much higher CAGR of 40% until 2028.
With opportunities like these, there could be some great returns for investors who focus on these segments. The Global X Robotics & Artificial Intelligence ETF (NASDAQ:BOTZ) invests in companies that utilize both robotics and AI, which includes autonomous cars. The fund has been around since 2016 and in the past three years it has generated returns of 50%, slightly below the S&P 500’s gains of 56%. But with these industries getting bigger in the years ahead, it wouldn’t be surprising if the fund were to outperform the market over the long haul.
Its top holdings account for less than 9% of the fund’s total net assets. Two of the top three stocks are Intuitive Surgical (NASDAQ:ISRG) and NVIDIA (NASDAQ:NVDA). With fewer than 40 holdings, this isn’t a terribly large fund but it could grow bigger as more companies get into these industries.