Why are hedge funds bullish on Arbe Robotics Ltd. (ARBE) now?

We recently made a list 8 Best Robotics Stocks Under $10In this article, we’ll take a look at where Arbe Robotics Ltd. (NASDAQ:ARBE) stacks up against other robot stocks under $10.

The concept of lifelike machines performing human tasks is fascinating to some and unsettling to others. However, robotics is not about replacing humans; it is about automating repetitive tasks to free up people for meaningful activities. Recent breakthroughs such as generative artificial intelligence (AI) services like ChatGPT have accelerated the adoption of automation in organizations. Robotics is already transforming our daily lives, from manufacturing and logistics to MedTech and even our homes, revolutionizing many industries and streamlining production lines in manufacturing. Most people interact with robots to some extent. For example, Sony Group Corporation offers the AIBO series, an autonomous entertainment robot for the home, while iRobot Corporation offers Roomba robot vacuums for cleaning the home. Additionally, companies such as Alibaba Group Holding Limited and Amazon.com, Inc. use robots to automate warehouse management and deliver products to customers.

According to Market Research Future, the global robotics market reached $59.7 billion in 2022 and is on an impressive growth trajectory. The market is expected to exceed $200 billion by 2030, driven by a projected 16.1% CAGR between 2023 and 2030. This growth reflects the increasing integration of robotics across sectors. Reflecting this growth, a recent press release from the International Federation of Robots (IFR) highlights significant investments in automation by U.S. manufacturing companies, with industrial robot installations increasing by 12% to 44,303 units in 2023. The automotive industry has emerged as the leading user of robots in the U.S., followed by the electrical and electronics sectors. IFR reports that automotive sales rose 1% in 2023, with a record 14,678 robots installed, up 47% in 2022 with 14,472 units installed.

The robotics industry thrives on healthy debate, and one of the most heated recent discussions has centered around humanoid robots. While the topic has been relevant for decades, the rise of startups like 1X and Figure, along with projects by established companies like electric vehicle leader Tesla, has brought humanoids back into the spotlight. Proponents argue that because our world was designed for humans, building robots in our image makes sense. Humanoid robots offer advantages in terms of reach, the ability to climb stairs, and dexterity.

The story continues

In this context, the robotics industry has caught the attention of high-profile tech figures. Earlier this year, Bill Gates highlighted several “cutting-edge robotics startups and labs” that excite him, including three companies focused on developing humanoids. Gates started with Agility Robotics, a US startup that has developed a human-centric, multi-functional robot designed for logistics work. The robot, roughly the size of a human, can handle heavy loads and express “emotions” via LEDs on its face to enhance interaction with human coworkers. Another notable initiative is Tevel, an Israeli startup that deploys autonomous flying robots for continuous selective fruit picking, ensuring a 24-hour harvest of ripe apples. Gates also mentioned Apptronik, whose robots have the potential to assist astronauts on missions to the moon or Mars.

Our methodology

For this list, we scoured various ETFs and online rankings covering robotics stocks to compile a preliminary list. Then, we selected the top robotics stocks trading below $10 based on the overall hedge fund sentiment toward each stock. This evaluation was done using data from Insider Monkey’s database, which tracks 919 elite hedge funds through the end of the first quarter of 2024. The list is sorted in ascending order by the number of hedge fund holdings at each firm. Why do we track stocks that hedge funds invest in? The reason is simple: Our research has shown us that we can outperform the market by mimicking the top stock picks of top hedge funds. Our quarterly newsletter strategy selects 14 small- and large-cap stocks each quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).

Top view of a semiconductor integrated circuit against the background of an array of electronic components.

Arbe Robotics Ltd. (NASDAQ:ARBE)

Share price as of June 11: $1.93

Number of hedge fund holders: 4

Arbe Robotics Ltd. (NASDAQ:ARBE), a semiconductor company, specializes in 4D imaging radar solutions for Tier 1 automotive suppliers and manufacturers worldwide, including China, Hong Kong, Sweden, Germany, the United States and Israel. The company offers advanced radar IC solutions that solve critical challenges in autonomous driving and autopilot systems, such as detecting stationary objects, identifying vulnerable road users, operating in low-light conditions and eliminating false alarms. Founded in 2015, Arbe Robotics is headquartered in Tel Aviv-Yafo, Israel.

In an April 3 research note, Roth MKM analyst Suji Desilva discussed Arbe Robotics Ltd.’s (NASDAQ:ARBE) cutting-edge 4D radar system, stating that “we believe ARBE’s advanced 4D radar can capture share in the existing multi-billion-dollar automotive radar market and expand into diversifying non-automotive markets as well.” The analyst noted the company’s commitment to several potential customers interested in its 4D radar technology for 2024, underscoring Arbe’s strong positioning of its advanced radar capabilities across various markets and geographies. Arbe’s long-standing partnerships with prominent Chinese auto parts manufacturers are seen as beneficial, as these partnerships can lead to the successful integration of high-quality radar technology into Chinese vehicles. In addition, Desilva pointed out that Arbe Robotics Ltd. (NASDAQ:ARBE) “continues to work with a number of global automotive OEMs, with an increasing focus on advanced ADAS platforms and models.” As a result, Desilva maintained a “Buy” rating on the company and raised its price target from $2 to $4.

At the end of the first quarter of 2024, 4 hedge funds tracked by Insider Monkey held shares in Arbe Robotics Ltd. (NASDAQ:ARBE) worth a total of $1.5 million, up from $1.24 million in the previous quarter.

Total ARBE takes 5th place on our list of the best robotics stocks to buy under $10. You can visit 8 Best Robotics Stocks Under $10. to see other robotics stocks that are on the hedge fund radar. While we recognize ARBE’s potential as an investment, our belief is based on the belief that AI stocks are more promising in terms of delivering higher returns and doing so in a shorter time frame. If you’re looking for AI stocks that are more promising than ARBE but are trading at less than 5 times earnings, check out our report on cheapest AI action.

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Disclosure: None. This article was originally published on Insider Monkey.