Robot revolution: 22 stocks to buy

The robot revolution is here — and it’s creating serious money-making opportunities for savvy investors.

Innovations like driverless cars, drones and robotic surgical arms are already disrupting how we live our lives. And this is just the beginning.

The market for robots and artificial intelligence is poised to soar, Bank of America Merrill Lynch estimates.

“The pace of disruptive technological innovation has gone from linear to parabolic,” the Wall Street bank wrote in a recent report.

Early adopters, the companies that have been the fastest to seize the opportunity, are the ones likely to capture the most upside.

These 22 U.S.-listed stocks were singled out by BofA as having the greatest upside to the robot revolution.

Dr. Robot

Robot stocks: Intuitive Surgical

Your next surgery could be done by a robot.

There were 570,000 robo-surgery procedures performed last year around the world, up from just 1,000 15 years ago, according to Intuitive Surgical.

That’s likely to continue to grow due to global aging trends and advanced technologies like robotic controlled catheters and HD microscopic cameras.

The global market for medical robotics and computer-assisted surgical equipment is set to soar to $18 billion by the end of 2022, BofA estimates.

Intuitive Surgical (ISRG) is one of top stocks in the U.S. that BofA identifies in this area. The company makes Da Vinci, which BofA calls the “granddaddy of surgical robots.”

The factory robot

Robot stocks: Rockwell Automation, Eaton, Emerson Electric, Honeywell, Parker-Hannifin, Teradyne

Manufacturing jobs face the gravest threat from robots. Countless jobs have already been lost to automation.

That is likely to continue around the world, especially as emerging markets like China modernize their factories and grapple with demands for higher wages. The global industrial robot market will more than double by the end of 2025 to $24 billion, BofA said.

There are many stocks around the world with exposure to industrial automation, but BofA singles out Rockwell Automation (ROK). The company products helps auto makers make more efficient cars.

Other U.S.-listed stocks with somewhat medium exposure to industrial robots include: Eaton(ETN), Emerson Electric (EMR), Honeywell (HON), Parker-Hannifin (PH) and Teradyne (TER).

Artificial intelligence

Robot stocks: Google (Alphabet), IBM

Elon Musk has called artificial intelligence mankind’s “biggest existential threat.”

At its simplest form, think of AI as personal assistants like Apple’s (AAPL, Tech30) Siri orAlphabet’s (GOOGL, Tech30) Google Now.

The AI industry offers tantalizing growth, with BofA saying the market for AI-based analytics is likely to grow tenfold to $70 billion by the end of 2020.

The sophisticated technology is being combined with machine learning and voice recognition to tackle major challenges and threaten previously-untouchable jobs of knowledge workers like customer-service representatives.

Google is a clear leader, with dozens of AI patents and the acquisition of neural network developer Deep Mind.

IBM (IBM, Tech30) is also a pioneer in AI. The company’s IBM Watson supercomputer can read a million medical textbooks in just three seconds and has even defeated the greatest Jeopardy champions.

Self-driving cars

Robot stocks: Delphi, Magna, NXP, Sensata, Tesla

Driverless cars are coming.

Tesla (TSLA) has already unveiled an autopilot feature and everyone from Google and Apple(AAPL, Tech30) toGeneral Motors (GM) is playing in this field.

The $5 trillion auto industry is “ripe for disruption,” BofA declared, saying self-driving cars are a “vision of the not too distant future.”

The move to driverless cars is being accelerated by sophisticated radar, lasers, cameras and GPS. The barriers are government regulation, user adoption, cybersecurity and high costs.

Key U.S.-listed players include Delphi (DLPH), Magna (MGA), NXP (NXPI), Sensata (ST) and Tesla.

Defense

Robot stocks: Lockheed Martin, Northrop Grumman
The American military loves drones.

Reports about drone strikes in remote corners of the world are ubiquitous.

U.S. military spending on drones alone has gone up tenfold since 2000 to nearly $3 billion in fiscal 2016. That’s despite cutbacks to the Pentagon’s budget in recent years.

Drones are seen as safer for military personnel, more accurate and cheaper. Automation more broadly is changing the way the U.S. and other militaries operate.

While drones face regulatory, privacy and human rights obstacles, the U.S. is the clear leader in this space. That’s great for major defense contractors like Lockheed Martin (LMT) and Northrop Grumman (NOC).

Financial

Robot stocks: Black Knight

Robots are even giving out financial advice these days.

One of the biggest disruptive forces in finance is the advent of robo advisors. These platforms provide automated investment services at far cheaper costs than humans.

It’s being led by WealthFront and Betterment but even more established players like BlackRock(BLK), Charles Schwab (SCHW) and Fidelity are jumping into the game.

Robots are carving a role elsewhere on Wall Street, including automated trading, fraud detection and credit risk-checking.

BofA only singles out Black Knight Financial Services (BKFS) as having medium exposure. The company has a platform of automated valuation models that help mortgage companies analyze properties.

Software

Robot stocks: Cornerstone OnDemand, Marketo, NetSuite, SAP, ServiceNow

A robot could help decide your next raise.

Cornerstone OnDemand provides an automated compensation system that helps managers link pay with performance while simultaneously cutting down on clutter.

Other automated software service providers include Marketo’s (MKTO) cloud-based marketing platform, SAP’s (SAP, Tech30) IT management platform and similar systems sold by ServiceNow(NOW) and NetSuite (N).

Note: This list is part of a larger group of more than 200 stocks Bank of America Merrill Lynch highlighted as having small, medium or high exposure to robotics. CNNMoney excluded stocks with low exposure to robotics as well as ones that aren’t listed on U.S. exchanges or have ADRs listed in the U.S.

Source: CNN Money