The Bot Brief

"There is no force on earth more powerful than an idea whose time has come."     

- Victor Hugo

Bots in the News:

This past week the markets took a breather from the recent bearish tone. The S & P 500 finished the week eking out a fifty-one basis point gain. Unfortunately, the Bot Index slid another eighty-six basis points. The once significant positive differential the robotic companies held against the broad market has shrunk to a bit over 3 index points since the advent of the 20’s decade. Just since the end of 2024, the variance has moved from around 12 points to the current 3-point spread. Since inception of the Bot Index in 2016, there still a significant positive spread between the automation companies and the S & P 500, however, it is important to note the swing away from technology stocks and into more mainstream segments of the economy.

Oceaneering International gained 6.50% during the week was the sole component of the Bot Index that produced a gain over 5%. Zachs Investment Research maintains a ‘buy’ ranking for the stock as energy production has taken a leading role in the Administration’s economic focus.

iRobot was the worst performer with an 11.35% decline during the week. The company’s economic viability is in question and, along with 3D System, these two stocks will be dropped from the Bot Index. Their low prices carry an inappropriate level of impact on the percentage performance of the entire Index.

Nio Corp., the Chinese EV manufacturer is facing increased pressure from SEC mandates and weak sales in China. The less than expected sales created weaker than Wall Street estimated revenues (19.7RMB vs 20.81RMB) and earnings (loss of 3.17RMB vs 2.12 RMB).

Lockheed Martin fell 5.68% following the announcement that Boeing Co. had been granted a contract for the next-gen series of fighter jets. Boeing will be producing the F-47!

Two ‘Disrupters’ Whose Time Has Come:

Two segments of the automation industries are starting to make major changes in the way they will impact humankind. First, despite the recent $20 billion contract award for the Boeing next generation fighter, the acceptance of a major change in battlefield strategies is occurring. The remarkable success of Ukraine fighting forces has been attributed to their effective utilization of relatively inexpensive autonomous unmanned systems. Two recent studies by the Royal United Services Institute and the Center for Strategic and International Studies concluded that, “Together they paint a picture of a battlefield that is increasingly saturated with and dominated by the presence of uncrewed machines” so wrote The Economist in its March 15^th edition. In the Ukraine, drones now account for more casualties than artillery and, with augmentation by Artificial Intellegience, their lethality continues to expand.

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This ‘disruptive’ factor in the practical application of drones to conduct warfare has every nation reconsidering its strategic and tactical platforms. With the U.S. having spent $820 billion in 2023 on defense, any more cost effective solutions to rising international tensions will be weighted heavily.

The second distrupter is the rapid ascent of humanoid robots. Long anticipated that normal human tasks would, ultimately, be augmented by a Jetson’s Rosie-like robot. Unlike their manufacturing precursors, the new humanonids are fitted with generative AI which brings three dimensional perception capabilities that allow for control, skill planning and machine learning. NVIDIA Corp, Boston Dynamics, Mercedes, Toyota Research Institure, Musk’s Optimus were recently featured in the Carros Show, displaying a remarkable array of new skills. Certainly robots are stepping into roles that reflect human capabilities and even thought processes. This wave of new competencies will likely achieve the $38 billion global market that NVIDIA anticipates by 2035 or the $10 trillion that Musk claims for the long-term.

Member: American Economic Association, Society of Professional Journalists, United States Press Association. Institute of Chartered Financial Analysts, Robotic Industries Association (now A3 Automation), Member IEEE.

The Bot Brief is a weekly newsletter designed for economists, investment specialists, journalists, and academicians. It receives no remuneration from any company that may from time to time be featured in the brief and its commentaries, analysis, opinions, and research represent the subjective view of Balcones Investment Research, LLC. Due to the complex and rapidly changing nature of the subject matter, the company makes no assurances as to the absolute accuracy of the material presented.