Robots — or automated devices that can execute tasks without human intervention — are witnessing a “new inflection point” and several global stocks are leading in a corner of the ecosystem, according to research firm Bernstein. These stocks are captured under the arc welding segment or “one of the largest robotic applications,” the investment banks’ analysts wrote in an Oct. 23 research note. They also noted that such robots account for around 10% to 20% of annual robot shipments. Arc welding involves the fusion of metal pieces with heat generated by an electric arc. This method is utilized in a range of industries including construction, shipbuilding, automotive parts manufacturing, aerospace and railways, Bernstein detailed. “To date, traditional pre-programmed arc welding robots have become one of the most important robotic categories,” the analysts highlighted. “By our estimate the total annual workload of arc welding in China amounts to ~1.3 million full-time welders. However, the traditional, preprogramming-based technology is not adequate to replace the majority of them,” they added. These robots feature software plays to “analyze input data” while also eliminating the need for it to be reprogrammed whenever a “workpiece’s type or position changes,” they added. Given this potential, the investment bank identified several themes — and stocks — it is watching in the arc welding robot ecosystem. Overweight-rated stocks Among the themes the investment bank likes is robot makers. They are “the direct beneficiaries, as smart welding alone could increase the overall robot market size by [over] 10%,” the analysts said, naming Shenzhen Inovance Technology as a stock they like. Inovance is listed on the Shenzhen Stock Exchange. Bernstein has a 12-month price target of 64 Chinese yuan ($8.98) on the stock, giving it around 13.4% upside. Beyond the robot makers, the investment bank likes other stocks set to benefit from the “broader robot renaissance.” These include Hikrobot — a subsidiary of the Shenzhen-listed Hangzhou Hikvision Digital — as well as the Tokyo Stock Exchange listed Keyence . These companies “have the best capabilities and/or are showing success in advancing adoption,” Bernstein said in explanation of its bullish stance on the stocks. Bernstein has a price target of 40 Chinese yuan on Hikvision, giving it 29.4% potential upside. Meanwhile, it has a target of 82,000 Japanese yen ($537.76) on Keyence, which implies around 26.5% upside. — CNBC’s Michael Bloom contributed to this report.
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