• Thu. Jan 23rd, 2025

Is Artificial Intelligence Stock Symbotic a Buy?

Is Artificial Intelligence Stock Symbotic a Buy?

The debut of OpenAI’s ChatGPT in late 2022 helped to kick off an artificial intelligence (AI) frenzy. Soon after, plenty of other AI companies rushed to tout their various AI strengths, hoping to attract investor attention. But which AI-related ventures will be worthwhile investments over the long haul?

One company investors might want to consider is robotics specialist Symbotic (NASDAQ: SYM). It provides businesses with AI-controlled machinery to autonomously process freight at warehouses. This technology can provide retailers with efficiencies similar to those Amazon achieves with its own robots.

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AI-managed mechanical workers are part of a growing industry. The global warehouse automation market was worth over $23 billion in 2023, and it is forecast to reach $41 billion by 2027.

So far in 2024 (through the week ending Dec. 6), Symbotic shares were trading down about 45%, creating a potential buying opportunity. Here’s a look at Symbotic to determine if it’s a good long-term investment to capitalize on the secular trend of AI.

Symbotic’s warehouse automation platform is impressive. AI enables the company’s robots to continuously learn as they work, improving efficiency and reducing mistakes. Its machines are also equipped with tech that allows them to “see,” so they can identify when stacks of boxes are tilted or otherwise not correctly placed.

That strong technology enabled it to capture customers such as retail giants Walmart and Target, and grocery chain Albertsons. Its agreement with Walmart runs to 2034 as it implements its platform in the retailer’s 42 regional distribution centers.

Overall, its business is in growth mode. In its 2024 fiscal year, ended Sept. 28, the company’s revenue rose 52% year over year to $1.8 billion.

To continue this, it partnered with SoftBank Group on a joint venture called GreenBox last year. It focuses on warehouse-as-a-service opportunities, essentially renting out warehouse space equipped with Symbotic’s automation.

With GreenBox, Symbotic is looking to deploy systems globally. Currently, the company generates all its revenue in North America, so expanding internationally is one of its goals. Its first foray internationally began in October with a customer in Mexico.

Although revenue is growing rapidly, the 2024 fiscal year ended with a net loss of $84.7 million. Even so, that’s a substantial drop from the prior year’s net loss of $207.9 million.

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