Accessing Artificial Intelligence & Robotics: Nasdaq CTA Artificial Intelligence & Robotics Index (NQROBO)
Introduction
The future is here. Artificial intelligence (AI) and robotics, together, is the augmentation and imitation of human activity and behavior to increase output or efficiency. Driven in large by technological advancements and an increase in implementation and demand, these burgeoning fields have both gained a lot of attention in the last few years and are now playing an ever increasing role in our daily lives, helping to solve some of the problems that our world faces, and to make the future a better place.
Take the recent COVID-19 pandemic, for example. Currently there is a shortage of ventilators across many hospitals in the United States and the world. To help address this problem, the University of Minnesota and a group of healthcare and technology companies have invented a new “light” ventilator that uses robotics, through the use of an electrically powered robotic arm to “mechanically squeeze an off-the-shelf adult resuscitation bag, the sort paramedics often use to help a patient breathe.”1 AI is also being used to tackle COVID-19, as well. According to a recent Harvard Business Review article, AI-based solutions are being used in a screening and triage tool; to power sensors to identify contagious individuals in crowds and groups; and to monitor patients with symptoms.2
As we highlighted in the 2018 research note, “Artificial Intelligence & Robotics: Industry Report & Investment Case,” what is most interesting today is the intersection of AI and robotics, where advancements in both fields feed on each other, creating a multiplier effect on this intersection. The fusion and harmonization of fields allows them to grow more rapidly, and AI and robotics are an essential part of this breakthrough.3 This is one of the reasons why AI and robotics, together, are geared for exceptional growth.
Defining Artificial Intelligence & Robotics
So what exactly is artificial intelligence? What is the future of robotics? Separately, AI and robotics are fundamentally different and can be used for a variety of purposes. Robots are programmable machines that can carry out routine tasks semi-or-fully autonomously. Artificial intelligence, on the other hand, is the development of computer models to complete tasks that would otherwise require human intelligence. In other words, artificial intelligence algorithms are generally self-trained to carry out tasks with some level of human behavior (e.g. language understanding capabilities). This shows that the two branches are fundamentally different, in that robots carry out pre-defined and routine tasks while artificial intelligence attempts to mimic “intelligence”. There is, however, an intersection of these two branches, which is artificially intelligent machines.4 Artificially intelligent robots or machines are the bridge between artificial intelligence and robotics. They are machines which are controlled by artificial intelligence programs. This allows robots to not only complete routine tasks, but also more complex tasks requiring more “intelligence.” These two branches can be summarized with the Venn diagram below.
Artificially intelligent machines go beyond humanoid robots; each intelligent robot can take many different forms and can be designed to satisfy a variety of needs. Some examples of AI-enabled robots are disk-shaped robots that vacuum floors, computers that combine eye-tracking and speech recognition to replace the keyboard and mouse, unmanned aircrafts, software for analyzing and optimizing designs, and genomics research products.
What is the Industry Outlook for Artificial Intelligence & Robotics?
In 2019, the global robotics market was valued at around “$34 billion and is expected to register double digit CAGR over the forecast period of 2020-2025”, according to Business Wire.5 Additionally, the sector is expected to grow “exponentially” over the next five years, as a result of “cost reduction, improved quality, increased production, and improved workplace health and safety.” The competitive landscape in this field is currently dominated by large international companies who are able to design, produce or enhance robots and/or artificial intelligence at a low cost and are able to generate revenue both from direct and indirect sales (examples: Samsung, Apple, Tencent, Alphabet and Facebook). However, there are number of smaller companies that continue to break into this space, such as business software company Cloudera and unmanned aircraft company AeroVironment, by providing highly specialized AI and/or robotics.
Some of the primary markets that AI and robotics companies are targeting are:
- Autonomous Systems
- Software
- Electronic Equipment
- Industrial Machinery
- Medical
- Manufacturing
- Biotechnology
- Defense
- Automotive
Nasdaq CTA Artificial Intelligence & Robotics Index Methodology – A Summary
The Nasdaq CTA Artificial Intelligence & Robotics Index is designed to track the performance of companies engaged in the artificial intelligence and robotics segment of the technology, industrial, medical and other economic sectors. The important difference about NQROBO when compared to other AI and robotics indexes is that its tiered methodology is designed to track the three levels of the AI and robotics industry involvement by classifying companies in the space into one of three categories: enabler, engager and enhancer.
- ENABLERS are companies that develop the building block components for robotics or artificial intelligence, such as advanced machinery, autonomous systems/self-driving vehicles, semiconductors, databases used for machine learning.
- ENGAGERS are companies that design, create, integrate, or deliver robotics and/or artificial intelligence in the form of products, software, or systems.
- ENHANCERS are companies that provide their own value-added services within the Artificial Intelligence and Robotics ecosystem, but which are not core to their product or service offering.
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