Nvidia’s next big bet is Robotics: Will Japan lead that revolution?
Japan might have lost the first war of AI, but when it comes to robotics, no one has managed to outpace their expertise.
Please note: This analysis is for informational purposes only and is not intended as investment advice. Mention of specific stocks is not a recommendation to buy or sell any securities.
There’s a reason Nvidia’s Deepu Talla, VP of robotics, is practically pounding the table about physical AI and robotics hitting their “ChatGPT moment.”
As we all know by now, ChatGPT set the world on fire with generative text and made AI a household name overnight. But sadly for Japan, generative AI in software is largely the domain of American and Chinese giants.
Japanese companies have struggled to capture much of the software-driven windfall from LLMs and ChatGPT clones. That’s because it requires formidable compute infrastructure and machine-learning prowess, arenas historically dominated by the West and, increasingly, China.
But robotics? That’s an entirely different story…
Japan is the world´s number one industrial robot manufacturer – delivering 45% of the global supply. In fact, recent years, the country's robot suppliers have increased their production capacity considerably: Their export ratio rose to 78% in 2020, when 136,069 industrial robots were shipped. This is the sector where Japanese engineering brilliance is so strong that China or even the US has struggled to compete.
With Nvidia proclaiming that physical AI (robots that can see, hear, think, and act) is on the cusp of exponential growth, Japan’s industrial robotics giants are suddenly looking a heck of a lot more interesting.
Because of this, I am looking at three of Japan’s most compelling robotics players, and how I think they will ride this AI-driven robotics boom. I’ll walk you through how each is positioned, where they shine from a fundamentals standpoint, and whether their valuations scream overpriced hype or underrated winner:
1. Fanuc (6954)
The Backbone of Industrial Robotics
How They’re Set to Gain
Fanuc is the global face of heavy-duty industrial automation—robotic arms, CNC systems, servo motors, you name it. If Nvidia’s AI modules (like Jetson Thor) really do spur a surge in next-generation “smart” robots, Fanuc is in prime position.
Why? Because they’re already entrenched in so many global manufacturing lines - cars, electronics, packaging etc. These machines all synchronize with each other and are often custom-built for each factory, making switching costs next to impossible without massive investments.
Hence, upgrading existing industrial robots with advanced AI capabilities is far easier when you’re working with a provider that has a massive installed base and a track record of bulletproof reliability.
In other words, Fanuc’s robots won’t just be “dumb arms” moving in predefined paths. With Nvidia’s generative AI, these arms gain near-human adaptability, improving quality control, reducing downtime, and potentially slashing production costs.
It is hard to stress how much this would mean for Fanuc. Today, robot arms are pre-programmed for very specific tasks, and reprogramming them takes a lot of time and effort. For a robot arm to be self-learning, able to absorb new methods to improve efficiency or instantly take on new tasks, these arms could double or even triple in value for their consumers!
Fundamentals vs. Potential
Size & Market Share: Fanuc’s historically commanded a significant slice of the industrial robotics market (some estimate them to hold north of 20% global share in certain categories). That scale already creates a high barrier to entry for potential challengers.
Balance Sheet Strength: Low Debt/Equity (~0.08) and a Current Ratio ~2.4 highlight that Fanuc is extremely conservative financially. This fortress-like balance sheet means they can handle cyclical headwinds and still invest heavily in R&D.
Profitability: Operating margin in the high single digits (9.2%) might seem modest, but it’s respectable in a hardware-intensive business. Plus, Fanuc’s brand strength often translates to sticky customer relationships and stable cash flows.
Value Check
Fanuc’s trailing P/E stands around 28, well above the broader industrial median (~16–17). But it’s not wildly out of line for a global robotics leader with robust FCF generation. Considering the upside from a new wave of AI-driven industrial upgrades—and a respectable 2%+ dividend yield—Fanuc could look appealing if you have a multi-year investment horizon. It’s no rock-bottom bargain, but you’re getting a premier robotics franchise at a still-reasonable premium.
2. Keyence (6861)
Sensors, Vision Systems, and the ‘Nervous System’ of Robotics
How They’re Set to Gain
If Fanuc provides the arms, Keyence provides the eyes and brains behind advanced factory automation. Keyence is the go-to for high-precision sensors, measurement equipment, and machine vision systems. Think about what humanoid robots or advanced industrial bots need as they evolve: real-time object detection, feedback loops, and complex image processing. Nvidia’s generative AI is only as good as the data it gets—and Keyence’s sensors are often the best in class at collecting that data.
With so many potential robotics deployments on the horizon—healthcare, warehouse automation, logistics, factory lines, Keyence’s high-end sensor suite becomes indispensable. The more complex the environment, the more sophisticated your sensors need to be. If Nvidia is serious about making robots as ubiquitous as ChatGPT, Keyence is sitting on a gold mine of sensor demand.
Fundamentals vs. Potential
Profitability Machine: Keyence routinely flexes 50%+ operating margins in strong cycles. That’s nearly unheard of in industrial equipment, highlighting its pricing power and asset-light approach.
EV/Sales & P/E: The company trades at lofty multiples (EV/Sales ~13.65, P/E ~39). So yes, the market already recognizes Keyence as a high-quality juggernaut. In fact, this is a stock that already seem to have priced in the massive benefits that could come from the next AI revolution…
Value Check
As a value investor, you’ll likely choke on a ~39 P/E at first glance. But Keyence’s margin profile and near-monopoly in high-end sensors can partly justify the premium.
The real question is: can generative AI in robotics spark enough growth to sustain or even push that multiple higher?
Possibly. If you believe the addressable market for advanced sensors is about to expand exponentially, there could be more room to run. But this is a company you’d likely average into rather than jump into with both feet especially if you’re value-conscious and want to keep your cost basis in check.
3. Yaskawa Electric (6506)
Motion Control Extraordinaire
How They’re Set to Gain
Yaskawa is a heavyweight in drives, motion controllers, and industrial robots, especially where precision is non-negotiable. That includes welding, painting, pick-and-place operations, and more. As Nvidia’s Jetson Thor and generative AI frameworks push for more complex, adaptable robots, the behind-the-scenes motors and drives need to step up. That’s Yaskawa’s sweet spot.
Generative AI isn’t just about giving robots “brains” to make decisions, it’s also about enabling them to carry out those decisions smoothly and safely. Yaskawa’s servo systems deliver that fluidity, essential in humanoid robots or collaborative robots (cobots) that operate near humans. In short, more sophisticated AI usage should fuel more demand for Yaskawa’s advanced drives and control systems.
It’s a classic “gold rush” scenario: when everyone else is digging for AI gold, Yaskawa is selling the shovels. The smarter the robots become, the more sensors and controls they need, which is where Yaskawa comes in!
Fundamentals vs. Potential
Market Standing: Yaskawa consistently ranks among the top global robotics players, especially in Asia. It’s not as big as Fanuc, but it has deep expertise in key motion technologies.
P/E & EV/EBITDA: With a trailing P/E near 39, Yaskawa also isn’t cheap. Its EV/EBITDA (~14.66) runs above the industry median (~11). This suggests the market is pricing in future growth, possibly from the anticipated AI-driven robotics push.
Cyclical Volatility: Yaskawa’s earnings can be more volatile than its peers, partly tied to global manufacturing cycles. You’ll want to brace for potential swings if macro conditions get dicey.
Value Check
Investors might hesitate when they see that 39 P/E. But if next year’s earnings come in strong (analysts hint at a forward P/E closer to ~21), that multiple may drop fast.
For a value investor, the cyclical nature of Yaskawa can be an advantage, when downturns hit, the stock often pulls back, offering more attractive entry points. Just remember, if the AI robotics wave ramps up, Yaskawa could gain pricing power in its core servo and drive segments, potentially offsetting cyclical dips.
Parting Thoughts
With Nvidia’s set to become the world’s most valuable company by pushing into AI robotics, this isn’t some passing fad. If even half the promised “ChatGPT moment” for physical AI pans out, factories, logistics centers, and healthcare facilities will race to adopt advanced robots.
Here’s the big takeaways:
Long-Term Tailwinds: The shift to AI-driven robotics isn’t going to peak overnight. It’s a multi-year, likely multi-decade trend. If you can stomach some near-term valuation froth, Fanuc, Keyence, and Yaskawa each offer high-quality exposure.
Fortress Balance Sheets: All three have relatively low debt, strong free cash flows, and proven track records of weathering downturns.
Valuation Caution: None are cheap by old-school value metrics. But sometimes, paying a reasonable premium for a secular winner is better than clinging to a dirt-cheap cyclical that’s about to get disrupted.
Bottom line: If you’re convinced we’re on the verge of a robotics revolution powered by Nvidia’s AI modules, than you are convinced that Japan Inc. will continue to outperform.
These three Japanese companies are at the forefront of hardware transformation. Fanuc is your broad industrial bet, Keyence is your sensor powerhouse, and Yaskawa is your motion-control specialist.
Each brings something unique to the table, just keep an eye on those multiples and invest with a long-term lens. As always, do your own due diligence, but don’t let the higher valuations scare you away from a space that could be on the brink of rewriting the rules of manufacturing—and maybe much more.
I note these are all industrial applications; does Japan have any consumer-facing robotics companies (outside of the toy market)? It seems foreign firms have really siezed the pole position in terms of humanoid/home robotics.