A tech leader poised to benefit from the robotics boom

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Today’s issue in preview:

• A tech leader poised to benefit from the robotics boom

• This country is a great AI investment vehicle you never considered

• Investors are generating huge returns in this industry. Why the good times will continue

• Learn our Top Themes to buy now

A tech leader poised to benefit from the robotics boom

Credit: kontekbrothers

Little by little, day by day, more people are coming around to our longstanding “bullish on robotics” thesis.

Over the past three months, many of our Money & Megatrends robotics bets have generated outstanding returns… and the subject is appearing in a growing number of podcasts, Wall Street research reports, and X posts.

In 2024, I named the Robotics Revolution as one of my top long-term investment themes… an industry where investors would get to enjoy a gale-force tailwind at their backs. Such tailwinds turn good ideas into great ideas. They turn great ideas into early retirements. They even have a knack for turning careless mistakes into winners, like tripping on a crack in the sidewalk and landing on a hundred dollar bill.

The Robotics Revolution is a giant, multifaceted megatrend poised to change our world in thousands of ways. Decades of progress in this field are now yielding autonomous cars, automated factories, surgical robots, military drones, delivery drones, and humanoid robots. Last year, Amazon announced it uses more than one million robots across its business. This figure will soon exceed the company’s number of human employees.

Investing in this trend has allowed us to score large wins in Vishay Precision Group (VPG), Allient (ALNT), Ouster (OUST), and Cognex (CGNX). These firms produce various precision-engineered “body parts” for the robotics industry… and their stocks have soared thanks to growing awareness of the emerging robotics megatrend.

However, one stock we’ve named as a robotics winner has “sat out” the industry’s rally so far. Our “pick to click” of machine vision firm Ambarella (AMBA) has largely moved sideways since we profiled it and other robotics stocks on February 5.

Ambarella is a $2.5 billion semiconductor firm that develops low-power, high-performance AI system-on-chips (SoCs). Known for intelligent computer vision, its technology analyzes video and sensor data at the “edge” (directly on devices rather than the cloud). Its products are used in automotive sensors and cameras, security cameras, robotics, and industrial AI.

Ambarella has also expanded into AI processors for autonomous machines and drones. “Edge Computing” use cases account for over 70% of AMBA’s total revenue, which the company reported grew 17% year over year last quarter.

Concerns over Ambarella’s current and future profitability have prevented Ambarella from rallying with the overall robotics theme. These situations are often resolved in a stock playing “catch up” with the rest of its industry group. We bet that “catch up” happens soon for Ambarella. After all, it’s a big bull market in robotics.

This country is a great AI investment vehicle you never considered

Credit: isitsharp

After two months of taking a breather, it looks like the uptrend in Brazil is ready to run again.

Back in September, I detailed the bullish price action in Brazilian stocks and recommended owning them. At the time, I noted how Brazil was a good way to invest in the critical resources uptrend.

Critical resources are the building blocks of the economy. Think raw materials like crude oil, natural gas, iron ore, copper, corn, and cotton.

Mining, extracting, planting, harvesting, processing, refining, and transporting these critical resources is a multi-trillion-dollar business that drives the economy.

With technologies like AI changing the world, it’s easy to forget about critical resources as an asset class. But when they enter uptrends, those uptrends tend to last a long time, and they tend to go higher than most people think is possible.

For many professional investors, Brazil is a preferred way to play commodities in the stock market. It is a true commodity superpower. Brazil is the world’s largest producer of soybeans, sugar, and coffee. It’s a major producer of cattle, cotton, corn, and orange juice. It’s a major producer of iron ore and crude oil. This makes Brazil heavily “geared” towards resource markets.

Brazil is also a beneficiary of the historic AI infrastructure spending boom.

Given AI’s enormous promise, large tech firms such as Google (GOOG), Amazon (AMZN), Microsoft (MSFT) and Meta (META) have invested over $1 trillion in specialized semiconductors, data centers, and other AI infrastructure components. They are on pace to invest over $700 billion this year alone and more than $3 trillion after that. Both the scale and the velocity of this investment boom are unprecedented. It is the largest collective investment effort of all time.

Brazil’s huge network of rivers also makes it a giant producer of hydroelectric power. This makes it an attractive destination for power-hungry AI data centers. Brazil also has large reserves of rare earth elements. Demand for these raw materials is soaring thanks to growing demand in AI infrastructure, robotics, and defense tech.

To add a cherry on top of this bullish cake, Brazil has a big spending, deep pocketed trading partner in the United States. U.S. companies can buy all the compute and rare earths that Brazil can bring to market.

Soon after my September note, Brazilian stocks – in the form of the iShares Brazil ETF (EWZ) – surged 38% in less than seven months. It then experienced a natural, healthy bull market correction from mid-April to mid-June.

As you can see in the chart below, this correction has ended. Brazilian stocks have paused, refreshed, and are now ready to resume their long-term uptrend. I’m still bullish on Brazil.

Investors are generating huge returns in this industry. Why the good times will continue

Credit: PeopleImages

To track and trade the world’s strongest business and investment trends, we monitor over 170 industry groups, over 30 proprietary thematic indexes, and over 70 ETFs.

This trend-tracking system serves as our “all-seeing eye,” monitoring the entire financial world… designed to spot and capitalize on powerful market trends. An ant can’t crawl around, and a dollar can’t be spent without our trend tracker seeing it.

Today, the most powerful message our trend tracker is sending – or perhaps “shouting” is a better term – is that the health care industry is booming… and our longstanding recommendation to be long this megatrend is paying off spectacularly.

Avid Money & Megatrends readers know that Boomer health care is one of our highest-conviction long-term trends. If you forced me to put all my portfolio into Boomer health stocks, I would not object in the least.

The bull case here is as follows: More than 10,000 Americans reach retirement age every day. The U.S. population aged 80 and older is projected to roughly double, from 14.7 million in 2025 to 29.4 million by 2045.

This is the enormous Baby Boom generation entering the phase of life where health care and longevity spending skyrocket. For many boomers, a typical month involves going to see at least one doctor to have something looked at, removed, or treated.

This means many health care businesses are experiencing huge demand now – and will for at least the next decade. It means boom times ahead for many “ology” businesses, stocks, and careers, such as dermatology, cardiology, radiology, oncology, anesthesiology, and ophthalmology. The list goes on.

Investing in many health care businesses over the next decade will be investing with a gale-force tailwind at your back. If you’re a parent and worried about your child getting a job, just point them to the booming health care industry.

Not that they need it, but many health care stocks offer us “AI kickers” as well. Since AI can collect and analyze vast amounts of data in ways that were impossible five years ago, it can vastly improve patient outcomes, make businesses more efficient, and assist with the testing and discovery of new treatments, devices, and drugs.

This week, these bullish drivers sent the Big Pharma focused Invesco Dynamic Pharmaceuticals ETF (PJP) to a new all-time high. They’ve sent the giant and diversified Health Care Select Fund (XLV) to a new all-time high. They’ve sent the S&P Biotech ETF (XBI) to a new one-year high. They’ve sent the iShares U.S. Healthcare Providers ETF (IHF) to a new all-time high.

They’ve sent health care diagnostics giant Quest Diagnostics (DGX), senior living giant Welltower (WELL), and cardiovascular treatment leader Edwards Lifesciences (EW) to new highs.

In other words, all kinds of health care businesses are booming.

I often say you want to work and invest in booming industries that are enjoying such strong revenue growth… such huge investment flows… and have so much future demand… that financially, you’re running downhill. You’re playing the game on “Easy” mode.

Given the extremely bullish outlook for many health care businesses and their already strong price trends, we can say that one such industry is health care. If you like making money, keep it in health care.

Market Notes

• Our recommendation to invest in peptide leader Eli Lilly (LLY) is paying off. The stock surged 3% this morning to reach a new all-time high.

• The American consumer continues to spend money with enthusiasm. Giant shopping mall operator Simon Property Group (SPG) reached a new all-time high today.

• America’s largest billboard advertising firm Lamar Advertising (LAMR) reached a new all-time high today. This is a bullish economic signal.

• U.S. banking giant Bank of America (BAC) reached a new all-time high today. This is another bullish economic signal.

• Railroad giant Union Pacific (UNP) reached a new all-time high today. This is another bullish economic signal.

Regards,

Brian Hunt
Editor, Money & Megatrends

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