FANUY Stock: Leading in the Machine World

FANUC stock
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FANUC Stock to Gain from Industrial AI  

Today’s stock is a good example of one of our favorite strategies of investing in growth stocks. We pick stocks of companies that are leaders in their field and stand to gain from the rising technology trends of current times. Our focus here is the increasing application of robotics, automation, and artificial intelligence (AI) in almost all areas of our lives. There are few stocks that would gain immensely from the increasing demand for such technologies.

The case in point being FANUC Ltd (OTCMKTS:FANUY), which is a leading player in industrial robots and automation. The manufacturer of factory robots and automation is focused on the sole objective of minimizing downtime in all factories around the world. The company has three business divisions—FA, ROBOT, and ROBOMACHINE—and provides innovation to manufacturing sites around the world. As AI and the Internet of Things (IoT) become indispensable in the coming age of machines, FANUC shall continue developing competitive products in these three segments.

Today, when a Tesla “Roadster” is orbiting in space, down here on Earth, FANUC robots are powering the production of Tesla “Model 3” cars. The rise of electric cars, as well as new technologies, has brought what is known as the Fourth Industrial Revolution (4IR), which implies a complete transformation of manufacturing through digital technologies.

The strengthening of fourth industrial revolution puts FANUY stock in a strong position. The industrial robot and AI company supplies robots for the automobile industry, which is undergoing an immense transformation. As major automakers prepare themselves to introduce autonomous driving and driverless cars, automotive is one field that shall continue driving the growth in AI and robotics.

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As per a recent report by Transparency Market Research, the global AI market is likely to touch a valuation of about $3.0 trillion from about $126.0 billion in 2015, representing a high compound annual growth rate (CAGR) of 36.1%.

The report further says that increasing interest in driverless cars, unmanned aerial vehicles, and auto control is anticipated to drive the growth in artificial intelligence market over the globe. (Source: “Global Artificial Intelligence Market: Headways in Automotive Industry to Offer Rich Opportunity to AI, says TMR,” Transparency Market Research, January 11, 2018)  

FANUC is well positioned to capitalize on this opportunity going forward. Globally, its products in all business divisions are expected to do better. In the recently announced financial results for the nine months ended December 31, 2017, the Robot business division posted impressive performance amid a favorable environment in the Americas, Europe, and China. (Source: “Consolidated Quarterly Financial Results,” FANUC Ltd, January 26, 2018.)

Demand from Americas and China were particularly robust. Sales were also steady in Japan. FANUC expects things to get better in the coming days, which bodes well for FANUC stock.

Moreover, FANUC recently announced an agreement with Hitachi, Ltd. (TYO:6501) and Preferred Networks, Inc. to establish a joint venture company in April this year. The new company will develop Intelligent Edge Systems to utilize AI technologies in edge devices in the industrial and social infrastructure field. (Source: “FANUC, Hitachi and Preferred Networks to establish a joint venture company for the development of Intelligent Edge Systems,” FANUC Ltd, January 31, 2018.)

Intelligent Edge Systems are the systems that use AI as an intermediary between the Cloud and edge devices such as machine tools, industrial machinery, and robots to achieve real-time control. And the new venture shall benefit from FANUC’s technologies and expertise in machine tools and robots.

FANUC stock may not be a triple-digit gainer but it has been rising steadily. The future looks better with the growing dependence on industrial robots and the coming age of driverless cars. FANUY stock has gone up by about 57% in the last five years and a little over 28% over the last one year.

FANUY chart

Chart courtesy of StockCharts.com

Analyst Take 

As AI technologies continue to expand and power innovations in a number of fields, FANUY stock shall keep flying higher. AI technologies shall increasingly play a significant role, particularly in the case of vehicles and robots, in the coming years.

As the emphasis shifts to machines sharing more and more of the workload, AI, robotics, and automation shall determine the future. FANUC is the leading player in this field and investors should not ignore this stock.