The next factory revolution: 8 automation stocks to watch

From industrial robots to intelligent sensors and AI-powered production lines, factory automation could be one of the next big structural investment opportunities as manufacturers focus on productivity, supply-chain resilience and efficiency.

Why factory automation deserves investors' attention

Artificial intelligence has dominated investment conversations, with much of the attention focused on semiconductors, cloud computing and data centres. But another transformation is taking place away from the spotlight: factories are becoming increasingly automated.

For decades, companies built global supply chains around the lowest production costs. Manufacturing shifted to locations where labour was cheaper, while efficiency often meant producing goods in fewer, larger facilities.

That model is changing.

Trade tensions, tariffs and geopolitical uncertainty have made supply-chain resilience a bigger priority. Companies are increasingly considering where goods are manufactured, how dependent they are on individual suppliers and how quickly production can adapt to disruptions.

But moving production closer to customers often comes with higher labour and operating costs. That makes automation an important part of the equation.

At the same time, ageing populations and shortages of skilled manufacturing workers are making it harder for companies to expand production simply by hiring more people.

The next phase of industrial investment may therefore be less about building more factories and more about making every factory more productive.

And while factory automation is not new, the combination of robotics, advanced sensors, industrial software and artificial intelligence is expanding what machines can do.

Three forces driving the next factory revolution

1. Reshoring is creating a productivity challenge

Governments and companies are investing in domestic manufacturing capacity and diversifying supply chains to reduce geopolitical and logistical risks.

However, relocating production to higher-cost markets does not automatically make economic sense. Manufacturers need to offset higher wages, labour shortages and construction costs through greater efficiency.

Automated production lines, robotics and industrial control systems can help companies produce more with fewer manual processes while improving consistency and reducing waste.

This could support demand for automation equipment as new factories are built and existing facilities are upgraded.

Importantly, the opportunity is not limited to the US. Europe and Japan also face workforce constraints, while Asian manufacturers are investing in automation to remain competitive as labour costs rise.

2. AI is making industrial automation more capable

Traditional industrial robots are highly effective at repetitive tasks, such as welding, painting and assembling products. But they generally operate within predefined instructions and controlled environments.

AI could expand these capabilities.

Machine-vision systems can identify defects during production. Predictive-maintenance software can detect potential equipment failures before machines break down. AI-enabled systems can also help optimise production schedules, reduce energy consumption and adapt to changes in manufacturing processes.

Over time, more capable robots could handle tasks that previously required greater human intervention.

This is where AI begins to move beyond the digital economy into the physical world.

However, the opportunity is not simply about building humanoid robots. Much of the near-term commercial value may come from improving existing industrial systems, where manufacturers can measure benefits through lower downtime, reduced waste and higher output.

3. Automation demand is expanding beyond car factories

The automotive industry has historically been one of the largest buyers of industrial robots. But automation is increasingly being adopted across electronics, food processing, pharmaceuticals, logistics and other industries.

Recent industry data illustrate this shift.

According to the Association for Advancing Automation, North American companies ordered 8,940 industrial robots worth approximately US$622 million in the second quarter of 2026. Robot orders increased 4.3% in unit terms and 21.3% in value from a year earlier, even as orders from automotive manufacturers weakened.

Non-automotive customers accounted for 56% of robot units ordered during the quarter.

This suggests that automation demand is becoming more diversified, although growth remains uneven across industries.

For investors, a broader customer base could make the automation opportunity more durable over time, particularly if adoption accelerates among smaller manufacturers that have traditionally relied more heavily on manual processes.

Eight stocks exposed to factory automation

The factory automation ecosystem includes companies producing industrial robots, control systems, sensors, motion technologies and software. The following eight companies provide different types of exposure to this structural theme.

These companies are examples of businesses exposed to factory automation, rather than a valuation-based screen or investment ranking. Their exposure to the theme varies.

Industrial software and control systems: Rockwell, Siemens and Emerson

Modern factories require more than robots. They need systems that connect machines, monitor production and coordinate complex processes.

Rockwell Automation provides factory control systems and industrial software used by manufacturers to automate production and improve operational efficiency.

Siemens combines industrial automation with software that allows companies to design and simulate factories before making physical investments. Its digital-twin technology can help manufacturers test production processes and identify potential improvements.

Emerson focuses heavily on process automation, supplying technologies used to monitor and control industrial operations, particularly in sectors such as chemicals, energy and pharmaceuticals.

These companies offer exposure to the software and control infrastructure behind smarter manufacturing.

Robotics and precision equipment: Fanuc, Yaskawa and Keyence

Japan remains an important centre of industrial automation technology, particularly in robotics, motion control and precision manufacturing.

Fanuc is a major supplier of industrial robots and computer numerical control systems used in manufacturing. Its business provides direct exposure to demand for automated production equipment.

Yaskawa Electric produces industrial robots, servo motors and motion-control systems. Its technologies are used in applications ranging from assembly and welding to material handling.

Keyence supplies sensors, machine-vision systems and measurement equipment that allow factories to inspect products, detect defects and automate quality control.

These companies represent different parts of the automation process: moving and controlling machines, performing physical tasks and ensuring production quality.

They also offer investors exposure to the adoption of automation across Asia, Europe and North America.

Integrated industrial automation: ABB and Schneider Electric

ABB and Schneider Electric provide technologies that help industrial facilities operate more efficiently, although both have substantial businesses beyond factory automation.

ABB supplies industrial automation, motors and drives, while Schneider Electric offers industrial control systems, automation software and energy-management solutions.

Both are relevant to manufacturers seeking to improve productivity and manage energy consumption.

One important portfolio distinction is ABB's agreement to sell its robotics division to SoftBank. Investors should therefore view ABB primarily through its remaining automation and electrification businesses rather than assume it will retain its historical industrial-robotics exposure.

What could drive the next leg of growth?

The long-term drivers of factory automation are structural, but the industry's earnings remain sensitive to shorter-term manufacturing conditions.

That creates two potential catalysts.

The first is a recovery in global manufacturing investment. If manufacturers become more confident about demand, trade policy and financing conditions, they may accelerate equipment orders that have been delayed.

The second is the commercial adoption of more advanced automation technologies. AI-enabled inspection, predictive maintenance and more flexible robotic systems could encourage manufacturers to upgrade existing production lines rather than wait for entirely new factories.

For investors, upcoming earnings announcements can provide important evidence of whether these trends are translating into business growth.

Key indicators to monitor include:

• Order intake and backlogs: Are manufacturers committing to new automation projects?
• Manufacturing PMIs and capital spending: Is industrial investment recovering across major economies?
• Robotics demand: Are orders expanding beyond automotive manufacturing?
• Software and service revenue: Are automation companies generating more recurring revenue from their installed systems?
• Margins and free cash flow: Are higher sales translating into sustainable profitability?

The distinction matters because exciting technology demonstrations do not necessarily lead to commercial adoption. Manufacturers ultimately need automation investments to deliver measurable improvements in productivity and returns.

What are the risks?

Factory automation may be a long-term growth opportunity, but that does not make every automation stock an attractive investment at every price.

• Manufacturing remains cyclical. Companies can delay equipment purchases when demand weakens, financing costs rise or trade uncertainty increases. Automation providers may experience significant swings in orders even when long-term adoption trends remain positive.
• Valuations can be demanding. Investors may already be pricing in a strong recovery or rapid AI adoption for some automation leaders. Disappointing earnings or slower orders could lead to share-price corrections.
• Competition is intensifying. Chinese automation and robotics manufacturers are improving their capabilities, potentially increasing pricing pressure on established Japanese, European and US suppliers.
• Implementation can be costly and complex. Retrofitting existing factories, integrating different systems and maintaining sophisticated equipment can be expensive. Not every automation project delivers the expected productivity improvements.
• AI adoption may take longer than expected. Industrial environments require reliability, safety and precision. Moving from successful pilot projects to widespread commercial deployment can take years.

Investors should also consider currency risks when investing in companies listed in Japan and Europe.

What this means for investors

Factory automation offers a different way to participate in the next phase of technological change.

While semiconductor companies provide the computing power behind AI, automation companies help bring intelligence into manufacturing processes.

For long-term investors, the theme offers exposure to productivity improvements, industrial modernisation and the changing structure of global manufacturing.

However, the companies involved are not interchangeable. Robotics manufacturers can be more sensitive to equipment spending cycles, while industrial software and control-system providers may benefit from a broader mix of new installations, upgrades and ongoing services.

For active investors, changes in manufacturing orders, earnings guidance and capital-spending expectations may create opportunities to reassess the sector.

The most important question is not simply how many robots companies can sell, but whether manufacturers are seeing enough productivity gains to keep investing.

The next factory revolution may not be about replacing people with machines. It may be about using technology to make manufacturing more productive, flexible and resilient. And the companies enabling that transformation could become an increasingly important part of the global industrial investment story.

The stocks discussed are illustrative examples of companies exposed to factory automation and are not recommendations to buy, sell or hold. Investors should assess company fundamentals, valuations, investment risks and portfolio suitability before making investment