The Industry 4.0 revolution has kickstarted a worldwide demand for automation technologies. The creation of ever more innovative technologies promises to transform global economies—and provide a world of investing opportunities.

From intelligence to production, investors exploring the automation tech market are quick to spot its cross-sector impact. Smart robotics, automated workflow systems, 5G, digitization, the cloud, the Internet of Things (IoT), among other innovations were once sci-fi. Now every day in finance and health care, retail and manufacturing, they perform and facilitate tasks that would otherwise be done by people; however, the strategies are more far-reaching than reducing labor costs.

Smart tech means smart investing: companies that create these technologies as well as businesses that utilize them to boost their performances are equally worth checking out.

Investors keep three end markets in mind: discrete automation (such as automotive production), process automation (processing of raw materials such as oil and chemicals), and hybrid automation (like food and beverages). In all these markets, companies see automation tech as a way to rapidly scale up production, reduce bottlenecks, ensure quality and safety, upskill work, and address consumer demand for faster manufacturing, speedier delivery, and connectivity.

The pandemic forced rapid, widespread adoption of automation technology, to keep people safe and support escalating demand for remote workforces, e-commerce, and more resilient supply chains. Since the shutdowns and COVID protocols have drawn to a close, these technologies have continued to transform industries. Automation is becoming increasingly accessible to small businesses thanks to the flexibility and lower cost of cloud-based platforms and services. In addition, it’s become part of everyday experience, with mobile apps and wearable devices. Investors interested in automation tech can become part of a disruptive groundswell of innovation at every scale.

Even before the pandemic, the automation market was estimated to be worth as much as $160 billion, on track to grow nearly 12 percent per year through at least 2025. Much of this growth is happening in Asia, the world’s manufacturing center, which owned 32 percent of the total automation market. Since the pandemic, these numbers have soared. Sectors as varied as electronics, metal and machinery, automotives, plastics, and food manufacturing are pulling in industrial robots to help them fill demand.

In North America alone, robot sales still lag behind Asia but are accelerating, thanks to the post-pandemic rebound in sales of cars and trucks and the e-commerce boom. Globally, mid-year 2022 saw a 25 percent jump in robot sales compared to the same period in 2021, with sales continuing to grow. Worldwide in 2022, the industrial robot population was 3.5 million, an increase of 31 percent over the year before. Traditional industrial machines were the bulk of the sales but a 50 percent increase in more flexible, programmable machines highlights a growing interest in devices that can work alongside humans.

Automation tech has also boosted the performance of tasks in sectors such as healthcare, HR, and finance, supporting the staying power of hybrid working and remote collaboration. In HR settings, even the simple ability to autofill data rather than manually enter it both improves efficiency and reduces the opportunity for human error. When harnessed, it could be a “driver of growth and job creation, including in new occupations and industries never before imagined,” according to the Aspen Institute.

Industry 4.0, the “fourth industrial revolution,” has brought together the physical and digital worlds on an unprecedented scale. “Digital twins” via the Internet of Things (IoT) allow companies to connect physical assets and digital assets. For example, digital twins reduce the risk of systems failure and track shipments of food to ensure safety from farm to table. Automation tech collects and analyzes data at a scale and speed impossible for humans, providing insights that can optimize productivity, quality control, and availability as well as predict servicing.

Additionally, much of the growth in the automation market is expected to happen in 3D printing, where automated 3D printers are already being used to produce on-demand machine parts, and nanomanufacturing, where automation is helping produce solar cells, batteries, and other tiny manufactured parts.

By layering together automation with these intelligent technologies, organizations are able to transform how they work, how they deliver services, and how they scale their businesses.

Demand, declining workforce populations, and less expensive technologies are driving growth in the rapidly evolving automation technology market. Investors look for three areas of opportunity: tech companies that are enabling automation, sectors that could experience a surge in automation, and non-tech companies that are harnessing automation to drive efficiency and more.

Companies that develop and produce sensors, controllers, and other systems can provide worlds of opportunity, as they work with companies in fields as diverse as semiconductors, automotives, chemical manufacturing, and scientific research. Industrial software developers show an equally diverse client base, from an augmented intelligence interface between humans and machines to operations management, data acquisition and analysis to smart robots that are accelerating assembly line processes and high-precision tasks.

Meanwhile, consumers are pushing for instant, personalized service, with the retail market growing increasingly dependent on robotics, from e-commerce giants like Amazon who use robots to move packages and optimize space in their warehouses, to smaller retail companies that use AR and VR to help people buy exactly what suits them. AR and VR also help workers upskill their work, from assembly to maintenance while robotics with advanced 3D vision and AI capabilities facilitate cutting-edge precision research and even safer food production.

In this new data era, connectivity brings together homes and cities and businesses, a promise that could fuel IT investments as much as $1.6 trillion over the next ten years—5 percent per year compared to the 2 percent average of the past ten years. For investors, companies that manufacture or source what lies behind these connections, such as semiconductors, networking infrastructure, and sensors, are increasingly attractive.

Investors can also pay attention to cloud-based systems, which have become ubiquitous across all sectors. Moving to cloud computing has become a mass migration, with nearly 92 percent of companies globally turning to cloud-based solutions to increase efficiency and reduce costs, and more than half planning to prioritize spending on these systems. For example, companies involved in supply chains and logistics turn to cloud-based platforms to trace their products’ end-to-end journey, from raw materials to point of sale. With almost all businesses using a public or private cloud, over 80 percent of companies are planning to spend more on automation technology.

While investors should always due their due diligence in a rapidly developing market like automation technology, predicted gains in productivity and efficiency for companies that utilize automation hold fast to the promise of growth.

Investing in automation technology doesn’t have to mean picking the next big company with the most advanced robotics. Indeed, given the rapid growth of the automation sector, investing in one particular company can be risky. Finding ETFs and mutual funds that offer exposure to this fast-growing sector as a whole allows investors to have diverse holdings in automation advances. Try these searches to get started:

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