The robot revolution is upon us. The use of robots and artificial intelligence is now common in virtually every sector of industry and is becoming a greater and greater part of the daily lives of consumers.
A November 3rd report from BoAML highlights that the use of robots and AI has moved far beyond mere routine work like factory assembly, and today robots are often involved in complex problem-solving.
As BoAML Equity Strategist Beijia Ma and team point put, the key to the robot revolution is that AI is being endowed with human perception, enabling robots to do a variety of tasks that formerly only people could do. Global sales of robots also continue to increase as 2014 was the third year in a row of record robot sales.
The impact of the ongoing robot revolution
The robot revolution is picking up speed. The use of robots will likely reach up to 45% penetration in many manufacturing sectors by 2025 (from around 10% in 2015). The costs of robots/AI technology have dropped by 27% over the last 10 years and should decline by another 22% over the next decade. Keep in mind the that the performance/productivity of robots is also is improving at a rate of more than 5% per year.
Ma et al. also note that both global aging (the 60+ population globally is projected to double from 841 million in 2013 to 2 billion by 2050) and emerging market wage inflation (China’s average manufacturing wage is up by 900% over the last 15 years) means demand for robot automation is surging.
The BoAML analysts project that the robots & AI solutions market will hit $153 billion by 2020, including $83 billion for robots, and $70 billion for AI-based analytics. Moreover, disruptive technologies will produce $14-33 trillion in annual economic impact by 2025 through cost reductions and improved efficiency. The report emphasizes that early adoption is an important competitive advantage, and those that lag behind will see their competitiveness decrease.
Robot revolution leading to paradigm shift
Keep in mind that the robot revolution is also ushering in major changes in equality, labor and safety in global society. The commonplace use of robots and AI is leading to a paradigm shift which is dramatically changing the way we live and work.
Ma and colleagues argue project major social challenges in dealing with the possible displacement of human labor given that at least 47% of current U.S. jobs have the potential to be automated, and growth in inequality with a 10% and growing supply and demand gap between skilled and non-skilled workers by 2020. The BoAML teams also anticipates disruptions relating to cybersecurity (given 50 billion connected devices by 2020), privacy, and also argue there is a real concern regarding a “longer-term existential threats being posed by AI (“killer robots”).”
BoAML investment themes: Eight potential fast growth areas
The report also highlights eight possible entry points for investors interested in the robots and AI theme:
1) AI; 2) Aerospace & Defence (incl. drones); 3) Autos & Transport; 4) Financials; 5) Healthcare; 6) Industrials; 7) Services (domestic); and 8) Ag & Mining.
Ma and team are projecting rapid growth in a wide range of sectors including agribots, AI, automation, care-bots, cobots, commercial and military drones, fintech, industrial robots, medical robots & computer-assisted surgery, self-driving cars, service robots, software and telehealth (Big Data).
