If you've already looked at how and why to invest in robotics stocks, now might be a good time to turn your attention toward learning more about the biggest robotics stocks in the marketplace. Their size is a good indication that investors are interested in buying into what they have to offer. Let's take a look at them.

The 10 biggest robotics stocks

In detailing the largest 10 robotics stock choices, some ideas quickly become apparent. For instance, buying into the mainstream robotics automation stocks usually means taking on specific geographic and industry exposures, namely the automotive and consumer electronics industries as well as a heavy exposure to Asia/China. That's fine if you want it, but you will have to think outside the box in order to avoid it. The list of robotics stocks in this article is intended to help with that.

The list contains a mix of pure-play robotics companies and automation companies, but in reality, robotics is just a subset of factory automation. That makes some sense when you factor in that the International Organization for Standardization (ISO) defines a robot as "an automatically controlled, reprogrammable, multipurpose manipulator programmable in three or more axes, which can be fixed in place or mobile in industrial automation applications."

In addition, some of these companies are also active in the process automation market. That simply means robotics, processes, and tools that handle the automated control of raw materials (examples include oil and gas, chemicals, and water).

Robots in an industrial 4.0 setting.

Image source: Getty Images.

How the list of leading robotics companies was compiled

Since it's impossible to find pure-play robotics companies, the following list isn't compiled purely on a market capitalization basis. Instead, it comprises the largest companies by market cap -- meaning the value of the stock market listing -- within a specific robotics theme. For example, Yaskawa, Fanuc, and ABB are the largest players in industrial robotics.

Alongside ABB, Siemens and Rockwell are the leading players in the closely related field of automation. Cognex is the largest company within its machine vision niche, and KION is the largest supply chain automation company. Intuitive Surgical and iRobot have first-mover advantage in and dominate their market niches.

In a nutshell, all these companies are No. 1 or No. 2 in their specific market areas and, combined, form the top 10 for the purposes of this article.

Company Country Company Description
1. Yaskawa (OTC:YASKY) Japan Leading robotics and automation company with good exposure to China/Far East manufacturing
2. Fanuc (OTC:FANUY) Japan Leading robotics company with good exposure to China/Far East manufacturing
3. ABB (NYSE:ABB) Switzerland and Sweden Major robotics, electrification products, and industrial automation company
4. Siemens (OTC:SIEGY) Germany Major industrial conglomerate that's shifting its focus toward automation and smart factory solutions
5. Rockwell Automation (NYSE:ROK) U.S. The leading U.S. industrial automation company with a fast-growing Industrial Internet of Things business
6. Cognex (NASDAQ:CGNX) U.S. World-leading machine-vision company
7. Zebra Technologies (NASDAQ:ZBRA) U.S. Scanners, mobile computers, and barcode readers that provide support to smart robotics/automation
8. KION Group (OTC:KIGRY) Germany Forklift truck manufacturer and leading warehouse automation company
9. Intuitive Surgical (NASDAQ:ISRG) U.S. Manufacturer of the market-leading da Vinci robotic surgery system
10. iRobot (NASDAQ:IRBT) U.S. Consumer robot company that dominates the market for robotic vacuum cleaners

1. Yaskawa and 2. Fanuc: The Japanese robotics plays

Four companies dominate the general industrial robotics market: Fanuc, Yaskawa, Kuka (OTC:KUKAF), and ABB. What's immediately noticeable is that none of the four is based in the U.S. Kuka is a German company that is now owned by China's Midea Group, and ABB is a Swiss-Swedish company with listing in those countries and also in New York (more on ABB later).

The fact that two Japanese companies, Fanuc and Yaskawa, are leaders in robotics is a testament to the importance of Asia to the robotics world. In fact, according to the International Federation of Robotics (IFR), just five countries account for 73% of global robot unit demand, and three of them (China, Japan, and Korea account for nearly 60% of global demand) are in Asia. Moreover, as the chart below shows, five of the top eight are in Asia. Note too China's share of production among the top eight.

Worldwide supply of industrial robots.

Data source: International Federation of Robotics World Robotics Report.

The figures in the chart somewhat reflect the geographic sales mix at Fanuc and Yaskawa. For example, Yaskawa tends to generate around 60% of its industrial robot sales from Asia, with China and Japan contributing 24% and 22%, respectively. Similarly, around 62% of Fanuc's automation and robot sales come from Asian countries (Japan contributes 26% and China 17%).

China looms large in the prospects for both companies. Even though the country is already the biggest market for industrial robots, its so-called robot density is a lot lower, suggesting there's ample room for growth. Robot density is defined by the IFR as the number of installed robots per 10,000 employees in the manufacturing industry -- a measure of how automated a country's manufacturing production is.

As you can see below, China still lags its neighbors and manufacturing rivals, so there should be plenty of growth opportunities from the country for Fanuc and Yaskawa.

Robot density for selected countries.

Data source: International Federation of Robotics 2017 World Robotics Report.

However, one thing investors need to look out for -- and this argument also applies to ABB, Siemens, Cognex, and Rockwell Automation -- is that the robotics (and to a lesser extent the overall industrial automation market) does have exposure to specific end markets. That's not good when those industries turn down. To illustrate this, here's a look at the share of robots in use by industry globally from 2015 to 2017.

Share of industrial robots by industry.

Data source: International Federation of Robotics World Robotics Report.

As you can see, the automotive and electrical/electronics industries make up roughly two-thirds of demand. This is fine, but investors should note that Fanuc and Yaskawa both started reporting double-digit sales declines in 2019 when global automotive production turned negative and consumer electronics (particularly smartphone production) faced significant headwinds.

Putting all this together, an investment in Fanuc and Yaskawa is really a play on the growing adoption of robotics in the emerging manufacturing economies in Asia. But potential investors should be prepared for volatility because of their reliance on automotive production and the electrical/electronics industry.

3. ABB is in restructuring mode

The two European industrial giants -- ABB and Siemens -- share many things in common. Both are major players in the factory automation and process automation markets. A reminder, process automation involves the automated control of raw materials. Some examples of this include petrochemical refining, chemical processing, and water treatment. Moreover, both companies' automation businesses are merely a part of a larger corporation.

However, the good news for robotics followers is that both companies' earnings are set to become more focused on industrial automation, robotics, and smart manufacturing in the future.

ABB is a company in transition. Following years of lackluster performance and a feeling that the company's performance didn't match up to its potential, management decided to take action and sell its underperforming power grids business to Hitachi and push ahead by digitalizing its solutions and investing in partnerships, like the one with industrial engineering software company Dassault Systemes (OTC:DASTY), to create so-called digital twin solutions. In a nutshell, a digital twin is a virtual replica of physical assets (say, a gas turbine or bottling plant), which can then be simulated to operate in various ways and determine the most efficient way to run the physical asset. Dassault's software platforms enable the digital twin creation, which should then add value to the robotics automation solutions -- making ABB's offerings more valuable to customers.

In addition, ABB reorganized its business segments and changed its CEO in 2019 while deciding to ditch its longtime matrix management structure. Clearly, there's a lot of upheaval taking place at ABB, so investors in the stock will have to appreciate that they are buying into a turnaround story as much as they are a play on the growth of robotics and factory automation.

A man operating a smart robot.

Image source: Getty Images.

4. Siemens is also restructuring

ABB's automation rival Siemens is also in a hurry to restructure. It's sold a 15% stake in its healthcare business, Siemens Healthineers, and it floated shares in its renewables business, Siemens Gamesa, leaving it with only 59% ownership. Meanwhile, management tried to merge its mobility (railway trains, locomotives, coaches, and equipment) segment with Alstom. Furthermore, Siemens will spin off its gas and power business and merge it with Siemens Gamesa.

Everything points to a business and an investment that is becoming more focused on two segments: digital industries (factory automation, motion control, process automation, and industrial software) and smart infrastructure (smart building solutions and grid distribution systems).

In short, Siemens is becoming more of an automation play. Much like with ABB, its focus is on developing smart digital solutions in line with the development of "Industry 4.0." For reference, the first industrial revolution involved using steam and power, the second used electrification, and the third involved computers and automation. Industry 4.0 uses web-enabled devices and the Industrial Internet of Things (IIoT) to create smart factories that can be monitored, controlled, and iteratively adjusted by a control system.

As such, an investment in Siemens is an investment in an industrial conglomerate that's slowly transforming itself into a company focused on automation and the software needed to run it. ABB is already a much more focused robotics and automation company, but it's only a stock worth buying if you believe management will turn around the company as expected.

5. Rockwell Automation

The leading U.S. company on the robotics stock list and also the most focused automation play, Rockwell Automation is arguably the most interesting strategic asset in the industry. Indeed, process automation-focused peer Emerson Electric (NYSE:EMR) tried to take over the company in 2017. The idea was to add Rockwell's factory automation solutions to Emerson's process automation strength and create a de facto U.S. champion.

In rejecting the takeover bid, Rockwell decided to forge its own future and focus on factory automation and expanding its so-called connected enterprise -- really just Rockwell's way of talking about smart manufacturing (Industry 4.0 solutions). The company's connected enterprise revenue was around $300 million in 2018 (around 4.5% of total revenue), and management expects it to grow at a double-digit rate and more than double in the next four years.

Rockwell's long-term prospects look excellent, but investors will have to be willing to accept that the company's sales trajectory will fluctuate in line with the economy. As you can see in the chart below on the sales trends in the decade following the 2008-2009 recession, Rockwell's sales growth has been up and down, but the trend is positive.

Rockwell Automation sales.

Data source: Rockwell Automation presentations.

Moreover, one of the big things Rockwell Automation has going for it is an excellent record of free cash flow (FCF) conversion from net income, and that's likely to improve in the future given that half of its connected enterprise tends to be recurring revenue.

ROK Net Income (TTM) Chart

ROK Net Income (TTM) data by YCharts.

All told, Rockwell has good long-term prospects, but investors will have to be willing to ride out the ups and downs of the business cycle.

6. Cognex

Cognex dominates the machine vision market, with its main competition coming from Japan's Keyence. Cognex's 2D and 3D vision systems are needed to guide automated equipment and robots as well as monitor and control automated processes. Its products are used in industrial manufacturing (Cognex's traditional core industries are automotive and consumer electronics, with Apple being its largest customer), the logistics market to identify packages, and even in airport baggage handling.

As such, Cognex is a play on the increasing usage of automation in manufacturing and logistics, particularly if it's going to involve capturing more information as part of Industry 4.0. In fact, machine vision is a critical part of Industry 4.0, as it's impossible to process and act on manufacturing data if you can't capture it in the first place. Similarly, machine vision is needed to monitor the automated process.

Management sees a long runway of growth ahead of it, with a total addressable market of some $3.5 billion compared to a company revenue of around $800 million at the end of the decade. For reference, management claims a mid-20% share of the 2D vision market and a just-above-10% share of factory automation, with the other end-market shares in the single digits. In other words, Cognex has a significant market to grow into.

Cognex's total addressable market.

Data source: Cognex Corporation presentations.

Cognex's management believes the company can grow its factory automation revenue by 20% a year over the long term and its logistics revenue (driven by the growth in e-fulfillment centers) by 50% a year in the near future.

The company is undoubtedly a long-term growth story. But here again, the reliance on two key end markets (automotive and consumer electronics) can challenge Cognex's growth aspiration. For example, its sales growth stagnated in the 2018-2020 period due to a combination of declining light vehicle production and falling smartphone production, causing a pause in capital spending in those industries.

Despite this, the company's long-term future looks assured, and those investors who are confident in its outlook will see any near-term disruption as creating a potential buying opportunity in the stock.

7. Zebra Technologies

Cognex's intended 50% annual growth rate in logistics is emblematic of the potential for growth in the logistics and warehouse automation market. That's driven by the need for e-fulfillment and advances in robotic technology to make automated logistics and warehousing more productive. Zebra Technologies and Germany's KION are not pure-play robotics companies, but demand for their products is being driven by spending trends in robotics investment.

If Industry 4.0 and the increasing use of robotics are going to lead to a mass of information created by web-enabled devices, machines, and smart factories, there's also going to be a need to capture information through Zebra's mobile computers, scanners, and barcode printers. Whether it's a manufacturing and logistics environment, a healthcare environment, or a retail environment, there's going to be a need for human involvement to capture data in order to facilitate automated processes. A simple example of this need is the growing use of handheld barcode readers in a warehouse.

Zebra's revenue mix also makes it one of the least volatile (downside and upside) names on this list. It offers a nice split between retail and e-commerce, transportation and logistics, and manufacturing revenue (with healthcare and other assorted end markets playing a smaller role). Meanwhile, its heavy geographic exposure to North America (almost 50% of sales) and Europe (around a third) make it exposed to the adoption of Industry 4.0 in those regions rather than the overall growth in Asia.

Management expects it can grow revenue at 4% to 6% on an annualized basis over the long term. And just like Rockwell Automation, Zebra is historically very good at converting earnings into FCF.

ZBRA Net Income (TTM) Chart

ZBRA Net Income (TTM) data by YCharts.

8. KION Group

Germany's KION probably isn't a well-known company in the U.S., but it's the second-largest industrial truck (forklifts) supplier in the world and the market leader in Europe. It's also the world's leading supply chain automation systems company through its Dematic business.

The combination of industrial trucks and supply chain solutions (automation) makes it a major player in growth in warehouse automation. This may not sound like the sexiest of end markets, but consider that nearly half of the demand for KION's supply chain solutions comes from e-commerce. Management expects high-single-digit revenue growth from the segment over the midterm.

An industry 4.0 montage.

Image source: Getty Images.

Prospects for its other segment (industrial trucks and services) are more tied to overall industrial conditions in Europe, particularly as the region is responsible for roughly 68% of the industrial truck segment's revenue. However, almost half of the segment's revenue comes from services, which should be more resilient in an economic slowdown.

Given that the industrial trucks segment is responsible for around 74% of the company's global revenue, it's fair to say that KION is a company whose prospects are tied to the European industrial economy but has a growth kicker attached to it from supply chain automation and robotics in the U.S. That's not a bad combination if you can get the stock on a good valuation.

9. Intuitive Surgical and 10. iRobot

The two companies operate in vastly different end markets (robotic surgical procedures and robotic vacuum cleaners), but they actually have a lot in common. Both companies are U.S. based and offer investors in robotics a way to invest that isn't tied to the cyclicality of the traditional automation markets (like automotive and electronics). Moreover, both stocks are their industry leaders and are growing revenue at a mid-teens annual percentage rate.

ISRG Revenue (TTM) Chart

ISRG Revenue (TTM) data by YCharts.

In the case of Intuitive Surgical, the key growth driver is how well it can expand its installed base of da Vinci robotic surgery systems. That, in turn, will grow its instruments and service revenue. This is particularly relevant given that a much larger rival, Medtronic, is increasingly muscling in on the robotic surgical systems market.

There are probably two key ways Intuitive Surgical can do this. The first is through its operating leasing program, which allows customers to start or improve their existing robotic surgery programs without having to factor in the significant initial capital investment. This is important because it allows the medical facility to build the scale of its services to help pay for the equipment over the long term. The second way is by the growth in procedural categories it can be used in as well as surgeons' familiarity with performing robotic surgeries.

Intuitive isn't one of those stocks investors are ever likely to get to buy cheap on conventional metrics, but if you believe in the long-term growth story -- and if it can keep up a mid-teens growth rate -- then it has the potential to grow into its valuation.

iRobot is known as the consumer robot company, and it dominates the robotic vacuum cleaner (RVC) market, with an 82% market share in North America, a 61% share in Europe, Middle East, and Africa, and a 64% share in Japan. In fact, its global market share is 52% (70% if you exclude China).

The company's dominant position means it's ideally placed to take advantage of the growing interest in RVCs from those who own a more traditional vacuum cleaner. iRobot sees the overall global vacuum cleaner market as being worth about $10 billion currently. RVCs held a 24% share at the end of 2018, but interest is growing, and iRobot plans to capture a significant portion of that interest. Moreover, iRobot's growth potential isn't just restricted to RVCs. It plans to expand sales of its robotic floor mops and robotic lawnmowers as well.

A robot vacuum cleaner.

Image source: Getty Images.

All told, iRobot offers investors a way to profit from consumer adoption of robot technology in the home. In common with Intuitive Surgical, this means iRobot's stock prospects are more dependent on market penetration and technological adoption than they are on the overall economy or what's happening in the automotive sector or manufacturing in China. For robotics investors, that might provide some diversity to a robotics-related portfolio.

Investing in robotics

In summary, there's a nice mix of pure-play robotics companies (Fanuc and Yaskawa), leading automation companies (ABB, Siemens, Rockwell), a niche technology provider (Cognex), some robotics/automation support companies (Zebra and KION), and specific industry robot plays (Intuitive Surgical and iRobot) in the list of the top 10 biggest robotics companies. That's a good place to start fine-tuning which robotics companies you might want to consider investing in.