Bull of the Day: ABB (ABBNY)

ABB (ABBNY) is a $100 billion Zurich-based industrial company that specializes in electrification and automation. ABB's products and services help manufacturers and governments achieve greater efficiency, energy management, and sustainability.

Companies with some similar business lines might include Eaton (ETN), Siemens, and Johnson Controls. But ABB stands out with its robotics division. And they get to do "cool" stuff at the world's premier particle physics accelerator.

ABB and CERN, the European Laboratory for Particle Physics, identified in 2024 significant energy-saving potential through a strategic research partnership focused on the cooling and ventilation system at one of the world’s leading laboratories for particle physics in Geneva, Switzerland. The study included energy efficiency audits which helped identify a savings potential of 17.4% across a fleet of 800 motors.

ABB's four business segments -- Electrification, Robotics & Discrete Automation, Process Automation, and Motion -- are approaching a combined $35 billion in sales this year at modest 6-7% growth. What made ABB a Zacks #2 Rank recently was EPS estimates climbing to 13.6% growth after a first quarter 11% positive surprise.

I wanted to learn more about their business after I found they were one of the top holdings in the Global X Robotics & Artificial Intelligence ETF (BOTZ).

Turns out that ABB has interesting plans. On April 17 the company announced that it will launch a process to propose to its Annual General Meeting in 2026 to decide on a 100% spin-off of its Robotics division. The intention is for the business to start trading as a separately listed company during the second quarter of 2026.

From Electricity to AI, 140 Years of Innovation

This robotics spin-off is interesting because as I dove into the history of ABB, I see that they developed a unique operational structure and approach in the past five years.

In 2020, the company introduced the "ABB Way" operating model, decentralizing the company. Henceforth, the company’s 20-odd divisions assumed the highest operating level, with full accountability for their strategies, resources and performance.

So it makes sense that a division entering a new era of possibility would want to stand completely alone as it evolves.

In 2015, ABB introduced YuMi, the world's first truly collaborative robot, capable of working safely alongside human beings.

And the company's roots go back 130 years prior to Sweden where a company called ASEA was building the world's first three-phase systems for generators, transformers and motors.

Meanwhile in 1893, a Swiss company called BBC supplied Europe’s first large-scale combined heat and power plant producing alternating current.

It's fascinating to know the European story of innovation that was jump-started by the discoveries in electromagnetism of James Clerk Maxwell only two decades before.

After a century of innovating independently, in 1988 ABB was formed from the merger of ASEA of Sweden and BBC of Switzerland. The new company, headquartered in Zurich, had annual revenues of $17 billion and 160,000 employees at the time.

The US Footprint is Big and Wide

Now they have 110,000 employees (subsequent of various M&A including buying GE Industrial and selling its Power Grids segment to Hitachi) and maintain 170 manufacturing sites around globally.

In the US, ABB employs over 18,500 staff at 40+ manufacturing and assembly locations, from the northeast, across the southeast and Midwest, to the newest facility in New Mexico.

Electrification is headquartered in Atlanta, Georgia and Robotics & Discrete Automation is in Auburn Hills, Michigan.

Motion (think motors, drives and generator products) is based in Fort Smith, Arkansas and Process Automation (think digital control technologies for plant operations) is steered from Houston, Texas.

ABB claims that their Process Automation segment -- providing software, advanced services, and analytics to help customers create their own "safe and smart operations" -- is #2 in the market globally.

Robotics = Physical AI

As my readers and fellow investors know, I follow NVIDIA (NVDA) pretty closely and we are now in a phase of fully exploring what Jensen means by "physical AI."

Essentially, when intelligence crosses the threshold to "embody" an autonomous machine, whether car or robot, the rules change a lot. Because now human safety hangs in the balance.

At the Computex conference in Taiwan last month, NVIDIA unveiled three vectors to address the challenge: Isaac GR00T N1.5, the first update to NVIDIA’s open, generalized, fully customizable foundation model for humanoid reasoning and skills; NVIDIA Isaac GR00T-Dreams, a blueprint for generating synthetic motion data; and NVIDIA Blackwell systems to accelerate humanoid robot development.

"Physical AI and robotics will bring about the next industrial revolution," said Jensen Huang, founder and CEO of NVIDIA. "From AI brains for robots to simulated worlds to practice in or AI supercomputers for training foundation models, NVIDIA provides building blocks for every stage of the robotics development journey."

The ABB Spin-Off Will Chart a Path

Dozens of robotics startups are using NVIDIA tools to build the future of physical AI. And some of them will, if they make the cut, plan an IPO in the next few years.

Here's how ABB describes their Robotics division...

ABB Robotics is a technology leader and provides intelligent automation solutions to help its global customer base achieve improved productivity, flexibility and simplicity to solve operational challenges including labor shortages and the need to operate more sustainably. Customer value is created through the differentiated offering of the broadest robotics platforms, including Autonomous Mobile Robots, software and AI combined with proven domain expertise to a broad range of traditional and new industry segments. More than 80 percent of the offering is software/AI enabled.

This "IPO" could be less than a year away. And it will be closely watched by all industry participants and AI investors.

Here's what I told my TAZR Trader members on Tuesday when we bought a robotics company...

"The Biggest Industry in the History of the Planet"

We've already heard Jensen say that humanoid robots will be the next multi-trillion-dollar industry.

Marc Andreessen doesn't talk much about NVIDIA. But he just uttered the above (in quotes) and he follows closely what Elon is doing with Tesla (TSLA) Optimus and says general-purpose robotics is going to happen at giant scale in the next decade.

So the US shouldn't try to get the old manufacturing jobs back -- instead, we should lean hard into designing and building robots before we are surrounded by ones designed by China.

There's possible irony that robotics could be bigger than AI. Here's how one expert I follow describes it...

"In fact, robotics is often ignored in the discussion about AI. It will be the even more significant disruptive part, which was only made possible by AI. It is literally unimaginable how we will live in 10 years' time."

Be sure to check out my Monday video and article here...

The Week in AI where I talk about the next most important private robotics company (next to Tesla's Optimus).

Note: This entire article was researched and written by yours truly without the aid of any "chatterbot" LLMs. Take that AI overlords!

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