The best and worst AI automation plays: Good Buy or Goodbye
October 9, 2024
As AI seeps into all corners of the market, Zeno Mercer, VettaFi senior research analyst, joins the latest edition of Good Buy or Goodbye to lay out the best and worst automation plays. Mercer notes that the COVID pandemic brought to light major issues with global supply chains, especially regarding ports and labor. Thus, he highlights the robotics sector and Cargotec (CGCBV.HE) as a top pick, explaining that it is well-positioned with "cargo handling, maritime logistics, forklifts and all these ingredients that come together to help automate ports." In addition, the company has exposure in construction, giving it exposure to two major end markets. He also explains that robotics will benefit from reshoring and the energy transition: "One of the major costs of automation, from an operating perspective, is energy. So as we're seeing all these investments in data centers and nuclear, for example, that will reduce the operating cost of running things." Mercer adds that the top port in the US is ranked 53 globally, and says, "so we clearly have a lot of need to reduce this friction point." Thus, Cargotec is positioned to help with manufacturing logistics, especially as robotics becomes more collaborative with humans. However, there are potential risks in the sector. As the port strike brought to light issues with automation, Mercer says, "We shouldn't really allow ourselves to be kind of kneecapped by a group... saying no to automation is really not a great idea. I mean, if we did that to everything, we would never advance as an economy." On the other hand, Mercer is bearish on Salesforce (CRM), believing it is over-reliant on user-based licensing: "Right now, the way Salesforce operates is, it's very hands-on. It takes a lot of work to set up. And that has been a moat for them for many years. But the way they work is also primarily license-based on sales teams, number of users, and things like that. And so the way kind of the world is transitioning, we're starting to see more agents, AI agents if you will, that are helping with sales, customer service, marketing, all these things are increasingly commoditized in a way." He adds that he has "muted" expectations for Salesforce based on its future performance and ability to maintain growth, especially as players like HubSpot (HUBS) pose competition. "We just don't see that obvious path to monetization directly in the way that they're operating right now," he tells Yahoo Finance. Watch the video above to hear what Mercer thinks are some of the upside risks to Salesforce. For more Good Buy or Goodbye, click here. To watch more expert insights and analysis on the latest market action, check out more Market Domination here. This post was written by Melanie Riehl Read More...
As AI seeps into all corners of the market, Zeno Mercer, VettaFi senior research analyst, joins the latest edition of Good Buy or Goodbye to lay out the best and worst automation plays.
Mercer notes that the COVID pandemic brought to light major issues with global supply chains, especially regarding ports and labor. Thus, he highlights the robotics sector and Cargotec (CGCBV.HE) as a top pick, explaining that it is well-positioned with “cargo handling, maritime logistics, forklifts and all these ingredients that come together to help automate ports.” In addition, the company has exposure in construction, giving it exposure to two major end markets.
He also explains that robotics will benefit from reshoring and the energy transition: “One of the major costs of automation, from an operating perspective, is energy. So as we’re seeing all these investments in data centers and nuclear, for example, that will reduce the operating cost of running things.”
Mercer adds that the top port in the US is ranked 53 globally, and says, “so we clearly have a lot of need to reduce this friction point.” Thus, Cargotec is positioned to help with manufacturing logistics, especially as robotics becomes more collaborative with humans.
However, there are potential risks in the sector. As the port strike brought to light issues with automation, Mercer says, “We shouldn’t really allow ourselves to be kind of kneecapped by a group… saying no to automation is really not a great idea. I mean, if we did that to everything, we would never advance as an economy.”
On the other hand, Mercer is bearish on Salesforce (CRM), believing it is over-reliant on user-based licensing:
“Right now, the way Salesforce operates is, it’s very hands-on. It takes a lot of work to set up. And that has been a moat for them for many years. But the way they work is also primarily license-based on sales teams, number of users, and things like that. And so the way kind of the world is transitioning, we’re starting to see more agents, AI agents if you will, that are helping with sales, customer service, marketing, all these things are increasingly commoditized in a way.”
He adds that he has “muted” expectations for Salesforce based on its future performance and ability to maintain growth, especially as players like HubSpot (HUBS) pose competition. “We just don’t see that obvious path to monetization directly in the way that they’re operating right now,” he tells Yahoo Finance.
Watch the video above to hear what Mercer thinks are some of the upside risks to Salesforce.
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