ARKQ Forecast: Autonomous Tech & Robotics ETF

ARKQ is the second oldest fund offered by the famous Ark Invest — but is this ARK ETF a buy?

Here’s everything you need to know about the ARK Autonomous Technology & Robotics ETF.

ARKQ Background

ARKQ is an ETF that aims for thematic multi-cap exposure to innovation elements, including robotics, autonomous vehicles, energy storage, 3D printing, and space exploration.

The companies included in ARKQ are focused on disruptive innovation in automation and manufacturing, transportation, energy, artificial intelligence, and materials.

ARKQ invests in companies enabling industrial forms of automation, such as Lockheed Martin and Trimble, and in companies creating white-collar automation software, such as UiPath and Unity Technologies.

Additionally, ARKQ finds itself investing in a host of aerospace and defense companies, given their industrial and satellite capabilities.

There are several 3D printing companies in the fund, too. This technology has the potential to revolutionize supply chains by reducing production costs and logistical complexities.

ARKQ Details

• Ticker: ARKQ
• Type: Active Equity ETF
• Inception Date: September 30, 2014
• Expense Ratio: 0.75%
• Fund AUM: $1.67 billion
• Typical Number of Holdings: 30-50
• Weighted Avg. Market Cap: $173 billion
• Median Market Cap: $21 billion
• Active Share (S&P 500): 94%

ARKQ Top Holdings

ARKQ is an actively managed fund, so these holdings and their weightings are subject to change daily.

ARKQ’s holdings also overlap with another fund offered by Cathie Wood, the ARK Space Exploration & Innovation ETF (ARKX), given their common interest in industrial automation technologies.

Regardless, let’s meet the top ten holdings in the ARK Autonomous Technology & Robotics ETF.

#1. Tesla (TSLA) 11.5%

• 1-Year Trailing Performance: +73%
• Market Cap: $1.1 trillion

Tesla’s run is truly phenomenal — Elon Musk’s EV company grew from borderline-bankrupt to a $1 trillion market cap in a few short years.

Tesla has a significant head start on the other automakers shifting to electric vehicles and eventually autonomous driving.

And while competitors like Ford (F) are receiving high demand for their EV launches, Tesla is still dominating the market.

In 2020, Tesla accounted for 79% of EVs sold. That’s an unsustainable market share in the long-term, but it demonstrates the magnitude of Tesla’s first-mover advantage.

Tesla’s vertical integration puts more of its supply chain under its own roof, making the company less vulnerable to global supply chain shocks and chip shortages.

Here’s the trillion-dollar question moving forward: will people buy the EV version of their favorite automakers, or will the Tesla experience be too exceptional to ignore?

The TSLA-hyper-bull-case is a fully operational robo taxi fleet. That’s one of the primary drivers behind Ark’s $5k price target on the stock.

#2. Trimble (TRMB) 6.9%

• 1-Year Trailing Performance: -3%
• Market Cap: $18 billion

Trimble supports global industries across five segments: building and infrastructure, geospatial, natural resources and utilities, and transportation.

Trimble’s revenue breakdown is balanced across its four segments, with a common theme of autonomy that ties them together.

For example, agriculture is an area where Trimble shines.

The company’s software and hardware helps farmers maximize their productivity by digitizing their land and helping them plan their crops, execute work, and track the real-time status of their fields.

Trimble’s core selling point is industrial automation — one that fits nicely in ARKQ.

#3. Kratos Defense & Security (KTOS) 6.7%

• 1-Year Trailing Performance: -25%
• Market Cap: $2.6 billion

Kratos develops transformative, affordable technology, platforms, and systems for US National security-related customers, allies, and commercial enterprises.

Kratos specializes in unmanned systems, satellite communications, cybersecurity, cyberwarfare, microwave electronics, missile defense, hypersonic systems, training, and combat systems.

Kratos has a suite of Unmanned Aerial Systems (UAS) designed for Human-crewed and Unmanned Teaming operations conducted by the Air Force.

UASs commonly serve as unmanned escorts or wingman aircraft alongside a crewed fighter aircraft in combat.

Kratos also creates drones for C5ISR, sensory, and radar mission solutions.

Ark can’t resist a good space company, too.

#4. UiPath (PATH) 6.6%

• 1-Year Trailing Performance: -54%
• Market Cap: $16 billion

UiPath is a white-collar automation company that develops software to automate repetitive digital tasks normally performed by people.

The company’s platform is powered by a Robotic Process Automation (RPA) tool that helps enterprises discover what to automate, measure ROI, and optimize workflows.

UiPath offers solutions across seven industries, including Banking & Financial Services, Healthcare, Insurance, Public Sector, Manufacturing, Retail, and Telecom.

It believes that automation can be applied to 60% of manufacturing tasks, 43% of banking, financial services, and insurance processes, and 36% of healthcare and social services activities.

Here’s UiPath CEO Daniel Dines’ goal for the company: “Bill Gates used to talk at Microsoft about a computer in every home. I want a robot for every person.”

While the stock has gotten crushed since going public, we believe that white-collar automation will replace back-office jobs before blue-collar automation replaces manual labor.

#5. Unity Software (U) 6.4%

• 1-Year Trailing Performance: +7%
• Market Cap: $31 billion

Unity Software is the world’s leading platform for creating and operating interactive, real-time 3D content (RT3D).

While the company’s primary source of revenue comes from the gaming industry, it is expanding its presence in other sectors such as data analytics, advanced design, and visualization technologies.

Unity is well-positioned to become a leading metaverse stock. The company’s platforms enable users to create interactive content, build apps, and engineer experiences.

Unity CEO John Riccitiello sees RT3D as the inevitable evolution of how people engage with digital content and believes it will be the foundational technology of the metaverse.

The company has grown its revenue by +30% in 11 consecutive quarters.

If you’re bullish on the metaverse, Unity Software stock probably deserves an allocation in your portfolio.

#6. Iridium Communication (IRDM) 4.4%

• 1-Year Trailing Performance: +4%
• Market Cap: $5.3 billion

Iridium is a global satellite communications company that provides access to reliable voice and data services anywhere on Earth.

Satellite connectivity will likely be the first short- to medium-term benefits of expanding the space economy, and Iridium is Ark’s favorite publicly traded opportunity in that realm (until SpaceXorStarlink go public).

Iridium’s constellation architecture makes it the only network that covers 100% of the planet.

It provides low-latency, weather-resilient connections around the globe via its satellite phones, Internet of Things terminals, and mobile connectivity solutions.

Iridium helps connect ships at sea, planes in the air, trains on the track, and hikers off the grid — even in the most remote places.

We believe Iridium will perform well as the space economy heats up.

#7. JD.com (JD) 3.9%

• 1-Year Trailing Performance: -24%
• Market Cap: $94 billion

JD.com is China’s largest online retailer and its biggest overall retailer. It generates the most revenue amongst Chinese internet companies as well.

So, why is JD.com included in an autonomous tech and robotics ETF?

The company’s standard same- and next-day delivery services operate at speeds that rival Amazon.com (AMZN).

Leveraging robotic technologies and creating autonomous warehouses are the only ways to achieve these speeds.

#8. Lockheed Martin (LMT) 3.7%

• 1-Year Trailing Performance: +17%
• Market Cap: $116 billion

Lockheed Martin is a global security and aerospace company that employs 114,000 people worldwide and engages in the research, design, development, manufacture, integration, and sustainment of advanced technology systems, products, and services.

Lockheed Martin categorizes its business into four general categories: Aeronautics, Missiles and Fire Control, Rotary and Mission Systems, and Space.

Lockheed Martin’s integral role in US national security allows it to essentially print US dollars.

The company generated an astonishing $65 billion in sales for the year 2020.

Ark likes LMT for its industrial automation capabilities and potential — on land, in air, undersea, and in space.

#9. Komatsu (KMTUY) 3.6%

• 1-Year Trailing Performance: -21%
• Market Cap: $24 billion

Komatsu is a manufacturer of construction, mining, forestry equipment, and forklift, and industrial machines.

The company offers a series of robotic construction and mining equipment that makes mineral extraction safer and more cost-effective.

Komatsu has been ahead of the autonomous tech curve — it created an intelligent Machine Control dozer back in 2013 that significantly changed traditional construction concepts.

Today, among many other things, the company sells Autonomous Haulage Systems (AHS) that allow miners to reduce costs by 15% and increase production while promoting zero harm.

Mining is really dangerous — the more the machines do, the better.

#10. 3D Systems (DDD) 3.4%

• 1-Year Trailing Performance: -33%
• Market Cap: $2.3 billion

3D Systems provides comprehensive products and services, including 3D printers, print materials, software, on-demand manufacturing services, and healthcare products.

We might be early to 3D printing at scale, but this technology will eventually revolutionize manufacturing and supply chains.

For example, an aerospace company called Relativity Space is 3D printing entire rockets.

It also built the first autonomous rocket factory and launch services for satellites.

Compared to traditional rocket manufacturing, Relativity’s process requires 100x fewer parts, 10x faster production time, and no fixed tooling or simple supply chain.

We’re just now scraping the surface on the potential for 3D printing technology.

ARKQ: Frequently Asked Questions

What holdings are in ARKQ?

The top holdings in ARKQ are Tesla (TSLA), Trimble (TRMB), Kratos Defense & Security Solutions (KTOS), UiPath (PATH), and Unity Technologies (U). These companies develop some type of autonomous or robotics technology to varying degrees.

What is the ETF ARKQ?

The ETF “ARKQ” is one of six active funds offered by Ark Invest and specifically focuses on autonomous technology and robotics. It invests across several technologies in this area, such as autonomous vehicles, robotics, 3D printing, energy storage, and space exploration.

What does ARKQ stand for?

ARKQ is the ticker symbol for the ARK Autonomous Technology & Robotics ETF. ARKQ is an actively managed ETF that is up +250% since its launch in 2014.

What is ARKQ buying?

ARKQ has been buying shares in Nano Dimension (NNDM), Velo3D (VLD), and Blade Air Mobility (BLDE). ARKQ has sold some of its Tesla (TSLA) shares for rebalancing purposes.

Bottom Line: ARKQ Forecast

ARKQ companies are creating the future of automation.

Some of the profits might be down the road, but autonomous technology becomes more inevitable by the day.

This article is for informational purposes only, and it is not intended to be investment advice. Read our editorial guidelines and public equities research methodology to learn more about how we researched ARKQ.