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Table of Contents
š„ Hereās Whatās Happening Now
Markets were higher again, possibly pricing in a more dovish Fed after Bessent commented that they should cut rates by 50bp. I have heard similar rumblings, but my sense is that larger than 25bp cuts are reserved for emergencies so I donāt see it happening. So I agree with thisā¦.
The big news in markets right now is the relative outperformance of small caps the past couple of daysā¦.
Itās no secret that I think the Russell 2000 is a crappy index. What we see from time to time is that things get out of whack and they come back into line a bit over a couple of days. I donāt think we see any great rotation into small caps and if I decide to add to hedges it would probably be on IWM.
Meanwhile, crypto keeps chugging along. Bitcoin made new highs overnight, has pulled back a bit here thoughā¦.
š§ The Robots are Coming
UBS just wrote a report on robotics. I believe that robotics, or physical AI, is going to be one of the most powerful themes going forward (look for an ETF from us soon). As always I want to figure out who are the likely winners and losersā¦.
What UBS just signaled (and why it matters)
Cycle turning up: After ~2 years of manufacturing softness/destocking, UBS expects a recovery in automation through late ā25āā26, with the overall automation & robotics market at ~$201B in ā25 rising to ~$222B by ā27āhelped by digitalization, GenAI, and reshoring. Tariff noise could slow near-term decisions but boost medium-term capex as footprints localize.
Humanoids move from sci-fi to line item: UBS adds a new track for humanoid robotsāsmall today (~$1B ā25) but $30ā50B TAM by 2035 and $1.4ā$1.7T by 2050 if adoption scales from factory tasks toward general-purpose work. Early volumes hinge on Tesla/China buildouts and data for training.
Software is the quiet compounder: Industrial software (PLM/MES/digital twins) carries high margins and high-single-digit growth as factories digitize and GenAI interfaces lower adoption friction.
Robotics demand broadens: Robot density keeps rising (China now >50% of annual installs), auto no longer the majority end-market, and cobots are taking share.
AI spend is a tailwind, not the theme here: UBS carves āAIā into a separate stack but still sees it enabling automation (reasoning models, natural-language programming, predictive maintenance).
First-order winners (direct exposure)
Industrial software / digital twins ā recurring revenue + GenAI leverage
PTC (PTC), Dassault (DSY FP), Siemens (SIE GY), Autodesk (ADSK), AspenTech (AZPN) ā core PLM/MES/physics-grounded modeling used to design, simulate and run automated lines.
Factory & process automation platforms ā control + sensors + services
Rockwell (ROK), Emerson (EMR), ABB (ABB), Schneider (SU FP), Yokogawa (6841 JP), Honeywell (HON) ā DCS/PLC, instrumentation, lifecycle service.
Robotics ā arms, cobots, install base expansion
Fanuc (6954 JP/FANUY), Yaskawa (6506 JP), ABB Robotics.
Power & electrification for automated plants ā switchgear/transformers
Eaton (ETN), Hubbell (HUBB), Powell (POWL) ā benefited by capacity adds and higher electrical intensity of automated/AI-adjacent sites.
Early humanoid exposure (high-beta, event-driven)
Tesla (TSLA) via Optimus program; selected start-ups (mostly private). Keep sizing small; milestones = pilot deployments, unit ramp, and training-data scaling.
Second-order winners (picks & shovels around the core)
Machine vision / sensors: Keyence (6861 JP), Cognex (CGNX), Teledyne (TDY) ā quality control and guidance for robots.
Motion/precision & mechatronics: Parker-Hannifin (PH), AMETEK (AME), SMC (6273 JP) ā actuators, drives, precision components.
OT-focused integrators & services: Accenture (ACN), IBM (IBM) industrial software services; Jacobs (J), KBR (KBR) for process/DOE sites.
Industrial networking/IIoT & edge compute: beneficiaries as plants connect equipment and add AI at the edge.
Third-order winners (ecosystem & capacity unlocks)
Logistics/warehouse automation: Symbotic (SYM); operators like GXO (GXO) benefit from customer automation waves.
Grid upgrades feeding automated/AI sites: Quanta (PWR), MYR Group (MYRG) (transmission build), GE Vernova (GEV), Siemens Energy (ENR), ABB (HVDC/protection).
Industrial cybersecurity for OT (public: FTNT, PANW): more connectivity ā more attack surface.
Potential losers / risks to watch
Hardware-only automation vendors without software/service layers (pricing pressure, Chinese competition).
Names overindexed to tariff-sensitive capex if decisions slip; commodities downturn would dent process orders.
Cyber/quality failures in highly connected plants (operational risk).
Portfolio construction (H.E.A.T. framing)
Themes: āSmart Factoryā and āAI-enabled Automation.ā
Asymmetry: Core in software (PTC/ADSK/DSY/AZPN) + controls (ROK/EMR/ABB/SU); satellite in vision (CGNX/KEYENCE) and power (ETN/HUBB/POWL); optionality sleeve in humanoids (small).
Edges: Track cobot share, PLM/MES bookings, and China robot installs; watch digital-twin adoption on calls.
Hedges: Pair longs in software/controls vs. a basket of low-moat hardware; maintain index hedges for a macro slowdown.
What to monitor next (catalysts)
Book-to-bill re-acceleration across automation OEMs; signs of late-ā25/ā26 capex up-cycle.
Humanoid pilot deployments (unit counts, use-case ROIs).
MES/PLM GenAI features driving seat/ARR growth; cobot mix in IFR data.
Bottom line: UBSās update argues the automation up-cycle is re-starting, software is the durable compounder, robots resume secular penetration (with cobots & EMs doing heavy lifting), and humanoids become a realābut smallāoption on the out-years. Build your core around industrial software + controls + electrification, then layer torque via robotics/vision and a measured humanoid sleeve.
Gold and bitcoin are both vying to be safe havens for investors. Why gold is winning so far this year.-MarketWatch
When will people realize itās Gold AND Bitcoin, not Gold OR Bitcoinā¦ā¦
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ā #Matthew Tuttle (#@TuttleCapital)
3:47 PM ā¢ Jul 9, 2025
š Stock Corner
Todayās stock is Advanced Micro Devices (AMD)ā¦..
Barronās came out with a story suggesting that AMD might have a slight edge over NVDA in next generation GPUsā¦..
I think NVDA is a must own, but I donāt think you get a lot of alpha from owning it. Not sure AMD is in that same category, at least not yet, but would put it as a stock you ought to own.
š¬ In Case You Missed It
I appeared on the Advisorās Option podcast talking about options strategies and some upcoming productsā¦ā¦.
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