Market Overview

Mr. Roboto And Artificial Intelligence Are Social Distancing Winners


A bevy of themes, including cloud computing, streaming entertainment and video games, are benefiting from shelter-in-place and social distancing protocols forced by the coronavirus.

What Happened

Somewhat lost in the coronavirus winning theme trend is the performance of artificial intelligence and robotics names, which are strutting their stuff as social distancing winners. For example, the Indxx Global Robotics and Artificial Intelligence Thematic Index is up almost 40% over the past 90 days.

That's great news for the Direxion Daily Robotics, Artificial Intelligence & Automation Index Bull 3X Shares (NYSE: UBOT), the only game in town when it comes to leveraged robotics exchange traded funds. UBOT is designed to deliver triple the daily returns of the Indxx Global Robotics and Artificial Intelligence Thematic Index.

Why It's Important

Data confirm UBOT is one leveraged ETF with virus benefits as it's more than doubled in just 60 days.

“Propelling this growth is a heightened awareness among executives, investors, and management teams that contemporary life is permanently and fundamentally changed as a result of the COVID-19 outbreak,” said Direxion in a recent note. “For good or ill, the virus has put centuries-old customs and practices that have prevailed in the corporate world under modern scrutiny.”

Understand UBOT's rally isn't difficult. The coronavirus shined a light on vulnerabilities in global logistics and supply chain, areas robotics companies are expected to shore up in the coming years.

“Among the most apparent weak points in the global economy affected in the current viral crisis are those industries where human employees are expected to work in close proximity to others, with businesses in manufacturing, logistics or even the retail and healthcare industries unable to safely keep employees on the assembly line or in the field without risking exposure to the virus,” notes Direxion.

What's Next

UBOT is a leveraged ETF so it's not a long-term investment, but tactical traders ought to keep an eye on the fund because of the compelling growth story offered by robotics investments – one that was established prior to Covid-19.

“Even before the pandemic, these operational functions were rapidly being taken over by intelligent software or data workflow systems,” notes Direxion. “A recent report by technology industry analyst firm Gartner estimates that enterprise software like the kind used in process automation was the fastest-growing segment of the IT market in 2019. And despite the headwinds represented by the pandemic, the firm predicts that spending on software that will increase operational efficiency will remain relatively steady compared to other segments.”


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