We’ve discussed and picked quite a few robotics stocks over the years. Our best picks, our long-term “business ownership” holdings, are of course Nvidia (NVDA) and Intuitive Surgical (ISRG).
About five years ago, we put together an internal list and wrote about it. Some of those public robotic stock “idea” lists included UiPath (PATH, no longer a holding), Teradyne (TER, never a holding, but Cathie Wood bought in on the idea, lol), and PTC (PTC, also never a holding, has shown some promising signs, but no payoff).
Other idea picks we’ve made included ABB (SWX:ABBN, one we’ll talk about today), Rockwell Automation (ROK), and Zebra Technologies (ZBRA, have discussed alongside Inpinj (PI) a few times). We don’t own any of these stocks.
So why talk about them now? Really big changes and strategic shifts are taking place in the world of robotics. Nvidia’s AI revolution has unlocked the ability for computing power to address larger swaths of the economy besides just IT than ever before. And industrial processes, manufacturing, etc. are one of those large swaths.
A surprise bet on robotics: Semiconductor fabs
Especially with the summer of humanoid robots bubble the last two years, investors hope robotics will enter the very large “products and services” part of the economy. A human-like robot for every family? Don’t count on it, not anytime soon. The handful of publicly-traded startups are bleeding cash — cash that ultimately ends up in the pockets of a lot of semiconductor companies.
But in reality, at this point in time and for the foreseeable future, robotics are mostly the realm of infrastructure and manufacturing. These are parts of the economy that are a bit smaller (support for products and services), capital intensive, and thus need to be managed very differently than an end-market “product” or “service.”
That doesn’t mean robotics are a bad investment, though. On the contrary, there are some hidden areas where robotics are making a big impact RIGHT NOW, and expected to contribute sizable and profitable growth over the next few years. One of those key areas is in the operation of semiconductor fabs.
Let’s talk about AMHS: Automated materials handling systems.
The king of a kingdom you’ve never heard of
What is AMHS, exactly? It’s the AI and robotics systems (basically, buzz words for automation) that remove the need for manual human labor and input inside a semiconductor fab.
One big part of an AMHS in a fab is the overhead railways that look like little trains moving wafers and other materials around. Sounds silly? It isn’t, if you think about the dozens, or sometimes many hundreds, of process steps each wafer has to undergo in its “development” before getting diced up into chips. Can you imagine the army of employees that would be needed to move those wafers around in a modern fab like Taiwan Semiconductor Manufacturing (TSM)?
And this is why we started with TSMC, which has spent decades developing its own in-house AMHS in Taiwan. In our last TSMC segment (Nvidia and TSMC Pledge Huge Investments to Address Tariffs – NVDA and TSM Stock Analysis), we mentioned the geographic concentration of the fabs in Taiwan as one reason TSMC commands far-and-away industry leading profitability. But that’s too simple of a take. TSMC’s AMHS is another factor.
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There is some video footage showing off what TSMC’s automation systems look like here: TSMC’s Automatic Material Handling System (AMHS)
Expect TSMC to lean heavily into its AMHS intellectual property to ramp up those incredible margins in new geographies Japan, Arizona, and Germany. This could be a great reason to buy the dip on TSMC, even though there is some extreme geopolitical uncertainty that needs to be navigated right now.
AMHS looks cool, but who are the robot suppliers?
The extent of what IP belongs to TSMC is unclear, but it’s almost certain that key suppliers (including Nvidia) are enablers of this impressive robotics system. Let’s discuss three of them, from three different continents, that we think could possess long-term shareholder appeal.
1. Daifuku (TYO:6383)
Specifically when talking about AMHS, we should start with Daifuku. They design and make all sorts of parts and AI software for those automated “trains” that operate overhead in a fab. The company provides some videos that give an idea of how gloriously complex this train system is: https://www.daifuku.com/solution/cleanroom/
Daifuku trades on Japan’s Tokyo exchange, and it has been in a solid revenue growth trend for years (with some short downturn cycles in between).
However, when denominated in U.S. dollars, Daifuku’s momentum doesn’t look so hot. This is problematic for U.S.-based investors, especially if you don’t have the ability to invest in Japanese yen-denominated shares. A weakening value of the U.S. dollar right now could exacerbate this problem (Daifuku doesn’t convert its currency as it’s based in Japan, so a U.S. based investor would have to deal with the currency exchange effect on their own).
But if you are in Japan, or have the know-how to do currency exchange hedging (not recommended for the vast majority), Daifuku could be a cheap “fab robotics” stock right now. Note that they’re in the early stages of a new CapEx cycle, which could depress free cash flow (FCF) for some time.
(Fun side point, ever wonder how you could invest in automated car washes? Daifuku has a small segment that does that too!)
2. Honeywell (HON)
Let’s move to an old U.S.-based industrial bellwether, Honeywell. We mentioned big strategic shifts are taking place in the industrial sector. The breakup of GE into three new entities last year was a great move for shareholders (we picked GE Vernova (GEV) early last summer: Nvidia Started A Data Center Energy Race – 1 New Stock Powering the Trend? GEV Analysis), and turns out that was a prelude for more similar decisions.
Honeywell announced late last year they’d be doing the same, splitting into three separate businesses so that each could have the freedom to grow their businesses the way they ought to (we’re no longer in the Jack Welch conglomerate era).
There will be semiconductor-related business units as part of all three of the new Honeywell companies (“electrification” and computing systems in aerospace, and semiconductor materials in the advanced materials company that will be spun off later in 2025).
But for today, we’re focusing on Honeywell automation, which will house the robotics business.
The semiconductor fab robotics segment appears to be very small currently. But we’d expect that to change. With the cost of semiconductors going up (inflation, tariffs, etc.), cost cutting to keep driving down the cost of product AND preserving margins will be key. We have no doubt Honeywell will ramp up its know-how in this department to capture some of the secular trend.
We’re hopeful that Honeywell’s breakup can work out well for shareholders, like GE’s final dissolution into three new stocks did last year. Flag Honeywell for further research, it could be really cheap if the spinoffs have the desired long-term effect. (Also, we’re flagging Honeywell’s Quantinuum quantum computing startup investment as well, as we are unclear which of the three new companies will own it, or if all three will own a stake in Quantinuum.)
3. ABB (SWX:ABBN)
Speaking of spin-offs, our last stock will take us to Europe. ABB is one of those “robotics stocks” we called out as a top idea in years past. Now, in early 2026, ABB robotics will be a standalone business too. More industrial conglomerate breakups are underway, which we think is great news for investors.
ABB did another spin-off in 2022 that worked out really well. Accelleron Industries (SWX:ACLN) was mis-priced under the ABB umbrella, and shareholders have benefitted greatly since then.
Could the new ABB robotics business do something similar once it begins publicly trading? It could. ABB is a leader in manufacturing cobots (we discussed those with a Lam Research (LRCX) update earlier this year: Value Chip Stock 2025 to Buy Now? Lam Research (LRCX)) and SCARA robots (“selective compliance assembly robot arm” or “selective compliance articulated robot arm”). Among them, “cleanroom” robots for use in sensitive areas like pharmaceuticals and chip fabs. Cobots and SCARAs are key ingredients in a chip fab AMHS.
Similar to GE and Honeywell, ABB thinks making the robotics division independent could unlock growth and value for the business if it were free to blaze its own trail.
Side point, and a Nick pet-peeve, ABB seems to have no regard for the Oxford comma! Maybe Mr. Voser listened a lot to the first Vampire Weekend album…
ABB could have some attractive financial valuation metrics after a selloff, and so we’ll flag it again as a robotics stock idea – with the aim of getting your hands on the ABB robots stock early when it makes its debut this time in 2026. However, similar to Daifuku, bear in mind ABB trades in Switzerland, and reports in Swiss francs. Mind the currency conversion risk.
Investing in fab robotics
In the meantime, if you want to invest in robotics for the long-term and forget about it, it really can be as simple as owning Nvidia and TSMC. Check out TSMC’s ROIC (return on invested capital) metric. For an industrialist and manufacturer, those are incredible numbers. The AMHS IP is no doubt a major reason why those ROIC figures exist as they do.
Additionally, we did the robotics stock update after Nvidia GTC and mentioned a handful of semiconductor stocks that will enable the robotics revolution – and turn a profit along the way! HUGE Nvidia Robot Revolution Update: Time to Invest Now?
