We recently published a list of 10 cheap robotics stocks to buy. In this article, we take a look at how Samsara Inc. (NYSE:IOT) compares to other cheap robotics stocks.
The progress of Western civilization is based on industrialization. In the late 19th and mid-20th centuries, the role of machines in factories was consolidated, leading to enormous increases in production and cost advantages that benefited society in the form of high-quality, mass-produced goods.
Today, the 21st century is the information age, thanks to the Internet. In developed countries, the service and tertiary sectors dominate, as human intellect is valued more highly than the ability to perform routine work. However, that does not mean that companies are not focusing on industrial production. In fact, estimates from the International Federation of Robotics (IFR) show that the number of industrial robots installed in America more than doubled in the decade between 2008 and 2018. In 2008, 15,170 industrial robots were installed in the United States, while in 2018 that number almost tripled, reaching 40,373.
This growth is important because most major American consumer electronics companies moved their manufacturing and production to China in the 1990s to take advantage of its low costs. In fact, the importance of robots to manufacturing is highlighted by the fact that 80% of industrial robot installations in America in 2018 were in the manufacturing sector.
But America’s tens of thousands of robots installed by 2018 doesn’t mean the rest of the world is “idle.” According to the IFR, America wasn’t among the top three countries with the highest number of installed industrial robots in 2017. That title went to China, which had installed 501,185 industrial robots by 2017 and added another 154,032 units the following year. Japan and South Korea came in second and third, with 297,215 and 273,146 installed industrial robots, respectively. But the highest number of installed robots worldwide is only one side of the picture. Like people, robot productivity is highest in groups, and South Korea, Singapore and Germany were the three countries with the highest robot density in 2017.
The most important factor for the growth of industrial robots is lower costs. Cathie Wood’s Ark Invest. In its study, the company points out that the cost of industrial robots has dropped by 50% every time their production has doubled. However, this cost reduction does not mean that robot quality is declining, because according to Ark’s data, robot performance has improved “33 times in seven years.” Ark concludes that the time from click to shipment in the warehouse decreased by 78% after Jeff Bezos’ e-commerce company installed the Kiva mobile robots.
But what about the added value that robots create? After all, a company’s main motive is profit, and if the robotics industry is to thrive, it must create economic value. In this regard, data shows that industrial robots across industries worldwide, from agriculture to construction, mining, and utilities, added a whopping $211.7 trillion in value in 2017. Metal and electronics manufacturing, construction, and chemical manufacturing benefited the most. In these industries, industrial robots added $2.2 trillion, $1.3 trillion, and $1.2 trillion, respectively.
Diving deeper, the automotive industry is an industry that has seen a lot of hype when it comes to robots, especially humanoid robots. This is largely due to Elon Musk’s belief that his car company can become a humanoid robot company in the future that generates a trillion dollars a year in revenue. We’ve covered this in detail as part of our coverage of . $30 trillion opportunity: The 15 best humanoid robot stocks to buy, according to Morgan StanleySo you should check it out as it provides a detailed introduction to the humanoid robotics industry.
But while Musk and MS are optimistic about humanoid robots, a critical analysis of their estimates naturally raises the question of whether demand for automobiles is also driving general demand for industrial robots. Looking at the data, it is a mixed picture across the years. For example, in 2017, 2018 and 2019, the automotive industry installed 125,700, 125,581 and 105,379 new robots, respectively. In the same years, electronics manufacturing installed 121,955, 105,153 and 87,712 new robots, respectively. So before the coronavirus pandemic, the automotive industry was the world’s largest customer of industrial robots. But in 2020, this picture changed, as in 2020, 2021 and 2023, the number of new robots demanded by the automotive industry was 79,849, 119,405 and 136,130 new robots, respectively. On the other hand, the electronics industry required 109,315, 136,670 and 156,936 new robots, respectively.
This was a historic shift that displaced the automotive industry’s dominance in the industrial robotics industry that had been prevalent since 1961. According to IFR, this was to some extent due to the automotive industry’s halt in production during the pandemic, as production halts led to delayed investments. However, between 2015 and 2020, industrial robot installations in the automotive industry declined by a compound annual growth rate (CAGR) of 4% per year. On the other hand, demand for consumer electronics boomed during the pandemic due to lockdowns and the shift to remote working. This, coupled with social distancing regulations in the manufacturing sector, triggered a historic shift.
Our methodology
To create our list of cheap robotics stocks to buy, we first sorted the holdings of the largest robotics ETFs by their average analyst price appreciation. This was chosen instead of P/E because many companies are unprofitable. We then selected the stocks with the lowest P/E ratios and further refined these to include only those stocks with an average analyst rating of “Buy” or better.
With these stocks, we also mentioned the number of hedge fund investors. Why do we care about the stocks hedge funds invest in? The reason is simple: Our research has shown that we can outperform the market by mimicking the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks each quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (Further details can be found here).
A data analyst wears virtual reality glasses while analyzing on-board telematics.
Samsara Inc. (NYSE: IOT)
Number of hedge fund holders in Q1 2024: 22
Price increase: 5%
Average price target: USD 41.54
Samsara Inc. (NYSE:IOT) is a technology company focused on the Internet of Things (IoT) industry. This industry leverages the connectivity of the internet to automate industries, supply chains, hospitals, and other sectors. Robots, especially in the logistics and warehousing industry, are an important part of IoT as they are connected to centralized networks for observation and operation. This also brings Samsara Inc. (NYSE:IOT) into the robotics industry. One example is the company’s GPS tracking products and their integration with DashPing’s Freight Bots for vehicle tracking, route planning, and shipping operations. Holistically, Samsara Inc. (NYSE:IOT)’s software business model means it also benefits from recurring revenue. In fact, the company was able to grow its high-value customer base in its first fiscal quarter, as customers with ARR of $100,000 or more accounted for 53% of its total ARR, a year-over-year increase of four percentage points.
Here’s what Samsara Inc. (NYSE:IOT) management had to say on the subject during the company’s Q1 2025 conference call:
“First, we continue to focus on serving large enterprise customers to achieve sustainable and efficient growth at scale. We now have 1,964 customers with ARR over $100,000, representing 43% year-over-year growth. We also increased our average ARR per customer with ARR over $100,000 from 305,000 in Q1 last year to 316,000 in Q1 this year. The combination of more customers added and an increase in average ARR per customer increased our ARR mix for customers with ARR over $100,000 to 53% in Q1, up from 49% a year ago and 45% two years ago. Second, our customers are increasingly using Samsara as a system of record for physical operations by subscribing to multiple applications on a unified platform. 94% of our customers with ARR over $100,000 and 83% of our loyal customers subscribe to multiple Samsara products.
We are also seeing large-scale adoption of several products. Our two vehicle-based applications, Video-Based Safety and Vehicle Telematics, each account for over $450 million in ARR, and our largest non-vehicle-based application, Equipment Monitoring, used to locate and manage field assets, is doing more than $125 million in ARR.”
General IOT 1st place on our list of cheap robot stocks to buy. While we recognize the potential of IOT as an investment, we believe some AI stocks promise higher returns and do so in a shorter time frame. If you are looking for an AI stock that is more promising than IOT but trades at less than 5x its earnings, read our report on the cheapest AI stock.
READ MORE: $30 trillion opportunity: The 15 best humanoid robot stocks to buy, according to Morgan Stanley And According to Jim Cramer, NVIDIA has “become a wasteland”.
Disclosure: None. This article was originally published on Insider Monkey.
