One primary selling point of artificial intelligence (AI) and robotics at the corporate level is the ability to harness these technologies for increased efficiency.
That doesn’t necessarily massive job attrition, but these technologies will, over time, replace some lower-skill roles. Enhanced profitability often follows enhanced efficiencies, underscoring the allure of AI and robotics to many companies. With that come myriad investment implications relevant to a variety of assets, including the VanEck Robotics ETF (IBOT).
IBOT debuted in April and follows the BlueStar® Robotics Index. The VanEck ETF could prove relevant today because of all of the fervor surrounding AI and robotics investing. And there are concerns about stagnation in U.S. workforce productivity.
For example, as observed by Morgan Stanley, the growth rate of productivity among U.S. workers has averaged just 0.3% per year since 2005, or less than half the rate seen from 1947 to 2004.
IBOT Could Be Worth Investigating
Indicating that IBOT could be at the right place and time, there’s the point that productivity gains cannot be delayed. Rather, they should be realized as soon as possible.
“The need to bolster U.S. productivity occurs against the backdrop of a world economy that is becoming less global: Political tensions and an increased focus on energy security — coupled with the COVID pandemic — have led to a less centralized, multipolar model,” notes Morgan Stanley. “Companies and countries are relying less on global supply chains and global market access and more on regional players and allies. One result of this shift has been a shrinking pool of labor for U.S. companies. Making cheap labor, particularly for skilled manufacturing, harder to find.”
Many IBOT member firms are at the forefront of driving industrial production lower while driving the adoption of industrial automation. As such, some forecasters believe revenue generated by industrial robotics purveyors can generate exponential growth over the next several years.
“The robust outlook for spending on IT suggests the adoption of new technology is likely to accelerate, helping support a rebound in productivity,” adds Morgan Stanley. “A recent Morgan Stanley survey of chief information officers across sectors shows that IT net spending expectations for the next three years are about 2.5 times above pre-pandemic levels, even as COVID tailwinds fade and macroeconomic pressures intensify.”
The bank believes AI can follow an adoption trajectory similar to what was seen with personal computers. It may even exceed it. Owing to increasingly tight labor pools, some companies may be forced to rapidly embrace AI and robotics. This trend could bolster the long-term IBOT thesis.
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