Research & Analysis: Cognex Corporation (NASDAQ: CGNX)

Industry 4.0, industrial automation, machine vision, advanced scanning and inspection

We’re circling back to the Industry 4.0 theme with Cognex Corporation (NASDAQ: CGNX).

Cognex fits into a market similar to that of Zebra Technologies (NASDAQ: ZBRA) in which the organization specializes in machine vision software and barcode-related technology.

The fundamental basis for machine vision oftentimes gets overlooked by the flashier hardware that makes up the machine. No matter how rudimentary the machines are, whether they’re sophisticated humanoid robots or what is essentially a mobile shelving system, robotics requires sensors and software to allow for them to translate images into data. To phrase it in the most basic manner, machine vision is basically advanced pattern recognition. Granted, it’s much more advanced than that, but that’s the essence of what the software is attempting to achieve, whether it is for mobility, sorting, or quality assurance.

Industrial automation comes with a variety of benefits:

• Labor augmentation

• Improved efficiency and scalability

• Waste reduction

• Improved quality assurance and defect rejection

• Improved safety

Though industrial automation isn’t necessarily a novel phenomenon, it’s advancing beyond the assembly line-type activity to AI-enabled situational awareness.

There was an interesting report published in the Opinion section of the Wall Street Journal on April 22, 2025, that outlined the initial strategy across the automotive OEMs to compete with the low production costs of Japanese models through industrial automation back in the 80s. I found the article quite comical given how many challenges were faced through the first iterations of robotics on the factory line, such as bolting incorrect bumpers on various vehicles.

I have bolted 50 wrong bumpers—Cadillac on an Olds, an Olds on a Buick, a Buick on a Cadillac

We’ve come a long way since the origins of robotics. With the emergence of machine vision, robots can translate a live video stream into data and effectively make decisions based on the presented information.

Though industrial machines have been around for quite some time, adoption remains in the early stages. Amazon has only recently begun testing a fully autonomous warehouse operation. Amazon; you know, one of the most advanced technology companies on the face of this planet. The company that is only the largest cloud services provider that hosts thousands of AI workloads. I’m sure everyone is well aware of Amazon’s tech dominance; I just wanted to emphasize that one of the most advanced technology firms is just now moving towards automating its warehousing facilities.

Industrial automation has also moved beyond the automotive industry, working its way into electronics, consumer packaging, and food & beverage, amongst other factory lines.

Cognex services multiple market verticals, including:

• Mobile phones

• Automotive components

• eCommerce packaging

• Food & beverage

Growth in Cognex’s logistics segment was driven by growth across eCommerce customers as more warehouse operations are automated. This in part is the result of barcode reading becoming more heavily utilized, particularly with AI-enabled vision technology.

Warehouse automation is currently in the early innings of adoption, primarily using barcode scanning and mobile robotics for running packages across a facility. The next stage of autonomous operations would include package inspection, object recognition, and dimensioning. These tasks would require more advanced machine vision as they would essentially replace human capital.

The logistics segment is expected to expand significantly in eFY25 as the market segment remains relatively under-penetrated. This segment should grow as a result of the release of Cognex’s modular vision tunnel and DataMan 380 products.

Cognex realized significant growth following C-19 with a period of capacity digestion between 2022-2023. 2024 appears to have been a recovery year with a return to growth in the logistics market.

Cognex’s machines cover a variety of the steps involved in manufacturing an automobile, including:

• Measuring inbound parts

• Guiding robot assembly

• Inspection