Is Symbotic the Real Deal? What Investors Need to Know About the Future of Warehouses.

SYM -4.04% WMT +1.29%

Key Points

• Its Q4 earnings report was impressive on several fronts.

• The company has a backlog of $22.5 billion in orders.

• Symbotic's revenue topped $2 billion in fiscal 2025.

• 10 stocks we like better than Symbotic ›

There is a lot of overblown hype regarding artificial intelligence (AI), automation, and robotics. The usefulness and real-world applications are still largely to be determined. There's a tremendous amount of speculation in this realm, which is why Symbotic's (NASDAQ: SYM) traction and growth are so impressive.

After an excellent earnings report for the fourth quarter of its fiscal 2025, ended Sept. 27, and an optimistic Q1 2026 forecast, Symbotic stock's meteoric rise continues. The question isn't whether or not Symbotic will succeed in transforming modern warehouses and supply chains; it's whether the company will become the gold standard and default option. If Symbotic can revolutionize the likes of Walmart's warehouses, expect to see a gold rush for the company as other major suppliers and retailers board the train.

Beating competition with actual revenue

Many robotics companies are still in the research and development phase. Symbotic, however, is signing new contracts and scaling. The company's revenue reached $2.247 billion in fiscal 2025, a 26% increase from the year prior.

Symbotic financials are gaining strength as the company reported significant increases in revenue; adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA); free cash flow; and adjusted gross profit margin in its Q4 earnings. The robotics company based out of Wilmington, Massachusetts, boasts an impressive backlog of orders, totaling approximately $22.5 billion.

Even more impressive is the list of blue chip companies using Symbotic's systems. Powerhouses such as Walmart, Target, and C&S Wholesale are a few of the well-known names signed to multi-year deals with Symbotic.

Labor shortages and the need for cost reductions make Symbotic's abilities appealing to major suppliers and retailers worldwide. Symbotic has also shown that it is effective in using AI to optimize its customers' operations. This particular expertise should help Symbotic improve its own margins, particularly where costly hardware hurts the balance sheet.

Symbotic's partnership with SoftBank is enabling the company's entry into a global marketplace, starting with Europe and Asia. This is an important step for the company and one in which its ability to execute will be tested.

The key to success is keeping R&D costs down

Symbotic faces significant headwinds in future research and development costs. The engineering, hardware, and testing needed prior to deploying its systems are expensive and will likely only get more so. Symbotic's overall expenses have grown, but not at a faster pace than revenue. The company will need to keep expenses in check as it invests capital in developing new technologies, which is required to maintain a competitive edge.

Symbotic needs to prove it can continue to scale without delay, and the backlog of orders does not become unmanageable. A slip-up in delivering on its promises will have customers looking at competitors' options. Another noticeable weakness is the current concentration of customers. Yes, working with Walmart and Target is impressive, but Symbotic has only a total of 11 active customers according to its most recent investor presentation. That concentration risk should decrease as new systems are deployed globally.

However, if there's an economic downturn, retailers, grocers, and suppliers might be more hesitant to spend massive amounts of money updating their warehouses and supply chain operations.

Symbotic is the real deal and the future of warehouses

Symbotic stock is up more than 200% year to date. Investors may think it's overvalued and trading at too high a multiple, but there's a case to be made that Symbotic is just getting started. Symbotic is the real deal, and its roadmap, combined with a backlog of orders, has made it clear, it will be a major player in shaping the future supply chain.

The market potential for Symbotic is enormous. From automations to AI-driven support software and ongoing maintenance support, Symbotic's potential for growth is expanding along with its capabilities. The company is focused on adding new vectors for growth, moving into international markets, and expanding its suite of products.

For long-term investors comfortable putting money in riskier growth-stage companies, Symbotic shows a lot of untapped potential. The global supply chain is in desperate need of updating and automating, and if properly executed, Symbotic could be the main company to meet that challenge.

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Catie Hogan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Symbotic, Target, and Walmart. The Motley Fool has a disclosure policy.

Is Symbotic the Real Deal? What Investors Need to Know About the Future of Warehouses. was originally published by The Motley Fool