How Machine Vision and Sensor Companies Are Powering the Robotics Revolution

In his October 21 edition of Money & Megatrends, MarketWise's Brian Hunt wrote:

Over the past 18 months, I've urged friends and colleagues to become heavily involved in the robotics megatrend. I believe it is one of the biggest financial opportunities of the 21st century...

It will yield greater factory automation, surgical robots, autonomous cars, autonomous air taxis, humanoid worker robots, and much more. Robotics investment is expected to rise at least 15% annually through the rest of this decade. Within five years, Amazon will employ more robots than people.

That's some staggering stuff – especially about Amazon (AMZN).

Yet, as Brian explained, the robotics industry will keep growing for the foreseeable future. Some projections have the robotics market valued at more than $215 billion by 2030.

But while most folks focus on the robots themselves, the technology behind the robots – or, more accurately, within them – is what's truly driving the robotics revolution...

And as investors, we should be watching that technology closely – as well as the companies that develop it.

I'm talking specifically about machine vision and sensor technology... in other words, how robots "see" and make decisions.

Today, we're going to cover what that means, why this trend will grow, and how little-known companies like Cognex (CGNX) are already delivering the goods.

The Hidden Tech Powering the Robotics Megatrend

Just so we're clear... robots don't have eyes or ears. But they do have machine sensory perception. This is how robots "see" and "hear."

Machine sensory perception is a robot's ability to collect information from its surroundings through sensors and artificial intelligence ("AI") algorithms. This allows a robot to function autonomously, make human-like decisions, and interact with its environment.

A critical part of this is machine vision. Machine vision systems use cameras, lasers, sensors, processing hardware, and software to "see" what's around.

These components are essential. Thanks to them, businesses around the world are adding robots to their workforce... and becoming more efficient and productive.

Why Machine Vision Is the Backbone of Factory Automation

The global workforce faces a harsh reality today. AI and robots are now capable of performing tasks and jobs that only humans used to be able to handle.

Consider these examples:

• In 2021, Nestlé reported a 53% increase in productivity using pallet-loading robots.

• A factory in Dongguan, China replaced 90% of its human workers with robots. It reported a 250% increase in productivity and an 80% decrease in product defects.

• Amazon claims productivity has improved by up to 300% when using robots in its warehouses.

It makes sense. Robots are programmed for consistency. They're not prone to human error. And they can work around the clock. For now, humans are still better at jobs that prize adaptability and dexterity... But AI and robot technology may soon close those gaps as well.

And that's exactly why Amazon plans to go almost fully automated. You may have heard about this in the news recently after Amazon's internal documents were leaked. The numbers, reported by the New York Times, are startling...

• The Amazon robotics team wants to automate 75% of the company's operations.

• This automation plan means Amazon could avoid hiring as many as 600,000 employees in the coming years. Yet the company still expects to sell twice as many products by 2033.

• By 2027, Amazon hopes to avoid hiring more than 160,000 new workers by using automation.

• Automation is expected to save Amazon around $12.6 billion between 2025 and 2027.

This is exactly what companies hope to achieve with robotics investments... massive savings.

Automation is clearly the future (and much of the present) of factory work. And the businesses investing in automation and factory robots must ensure that those robots are performing as they should.

That's where machine vision comes in.

A variety of machine vision sensors deliver real-time data to the robot while it works...

For example, vision sensors recognize and inspect the parts that the robot will be using. Proximity sensors guide the robot, help it avoid collisions, and allow it to work near humans. And force and torque sensors send feedback on handling and manipulation, so that tasks are done safely and correctly.

Robots have already successfully worked on automotive assembly lines, picked and sorted items in warehouses, and built electronic items. And they've performed all those jobs efficiently without sacrificing quality.

It's only a matter of time before robots learn how to handle even more complex tasks. Once that happens, it's a safe bet that even more businesses will move to automation to help their bottom line.

That's why investors should have robotics stocks on their radar now.

One Company Leading the Machine Vision Charge

Robots need machine vision to perform their duties. As such, companies that make machine sensory perception systems – according to Brian – "are poised to enjoy a huge tailwind at their backs."

Let's look at one example of a company at the heart of this trend...

Cognex (CGNX)

Cognex is a globally dominant player in machine vision. The company's market share stands at around 15%.

Cognex focuses its business on machine vision products – like sensors and software – to automate manufacturing and distribution tasks. Its clients include automotive, consumer electronics, medical, semiconductor, logistics, and food and beverage businesses.

The company has solid financials. Cognex's $276.9 million revenue beat projections in Q3 2025, increasing by 18% year over year ("YoY"). Its $0.33 earnings per share also exceeded analysts' expectations, up 69% YoY. And its $68.8 million adjusted earnings before interest, taxes, depreciation, and amortization ("EBITDA") outpaced forecasts up 67% YoY.

Cognex's operating margin grew from 13.4% to 20.9% YoY. And its free cash flow increased to $86 million from $52 million YoY.

These are strong growth numbers. And our Stansberry Score reflects more of Cognex's strengths...

We use our proprietary Stansberry Score as an easy way to measure quality in the stock market. Unlike many ratings scores, it isn't meant for short-term traders. It's designed for investors with a long-term mindset.

The score is based on four main factors... capital efficiency (the hallmark of Stansberry Research), financial, valuation, and momentum – with momentum being the smallest factor.

We give Cognex a stellar overall "A" score... and rank it in the top 250 out of the 4,600-plus stocks we grade. Take a look...

We've already seen the strength of Cognex's earnings. With those financials on its side, this stock earns "A" grades for both financials and capital efficiency. And it gets a B for valuation.

In September and October, CGNX began climbing to new 52-week highs, finally closing at a high of $48.35 on October 24. The stock has since cooled off somewhat. But growing demand from the automation trend and strong overall performance make Cognex worthy of a spot on investors' watchlists.

Why Machine Vision Could Be a Hidden Opportunity for Investors

Much like the materials companies building AI data centers during the current boom, machine vision technology is a "picks and shovels" play in the robotics explosion...

More companies are moving toward automation. The flashiest ideas may be to buy the robot makers themselves. But as this story plays out, machine vision will be a necessity for the robots and machines doing the automating.

As Brian noted, robotics is a long-term megatrend. And it's one that will likely continue over the next decade or so. So, we're still in the early stages of that timeline.

That makes now the right time to pay attention to machine vision companies.

Remember... Apple (AAPL) shares sold for $12 before the iPhone debuted in 2007. If you invested $1,000 in Apple stock then, it would be worth more than half a million dollars today.

Will machine vision companies like Cognex repeat that history?

It's not really an exact comparison. And the odds of any one machine vision stock reaching the heights of Apple are decidedly long. But you get the idea. It's all about timing.

The megatrend in machine vision, robotics, and automation is just beginning. Early investments like these can be volatile. But getting into these industries today offers similar upside to investing in AI three or four years ago.

Automation is going to continue growing steadily. Just ask Amazon.

The Takeaway on the Future of Machine Vision Technology

Until we no longer assemble items in factories or store and ship goods from warehouses, automation will continue to expand.

Businesses will want robots... And those robots will need sensors, software, and more.

As more companies turn to robotics to automate workflows and save money, machine vision technology will grow more important by the day.

If Amazon is a blueprint for other businesses, automation will spread to unprecedented levels... implemented in most factories, warehouses, and logistics hubs across the globe.

For investors, that means now is the time to pay attention to robotics stocks – and the machine vision industry.

Regards,

David Engle

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