The AI investment story may be entering a new chapter. While the first wave of artificial intelligence was driven by software, cloud computing and semiconductors, the next phase of AI's evolution could extend beyond the digital world and into the physical one.
As companies race to develop humanoid robots and autonomous systems, physical AI is emerging as one of the most closely watched frontiers in technology. The fact that some of the biggest names in AI are increasingly directing capital and resources toward humanoid robotics underscores the scale of the opportunity.
The commercialization of physical AI could unlock entirely new markets, potentially creating a multi-trillion-dollar opportunity over the coming decades. Reflecting the scale of this potential, Masayoshi Son, CEO of SoftBank, stated that physical AI and robotics could give rise to the next trillion-dollar company, underscoring the immense economic potential of the sector, as quoted on CNBC.
At the same time, the AI trade has become increasingly concentrated, with a handful of mega-cap technology stocks accounting for a significant share of investor enthusiasm and market gains. Against this backdrop, investors may look to physical AI as a way to broaden their exposure to the next stage of AI. Still in its early innings, the theme remains relatively less crowded compared with many of today's AI winners. If humanoid robotics achieves widespread adoption, physical AI could become one of the most significant growth stories of the coming decade, potentially opening a new chapter in the AI investment landscape.
Humanoid Robotics Moves Up Market's Watchlist
According to Barclays' "AI Gets Physical" report, the coming decade could be defined by the rise of robotics. As quoted on the abovementioned CNBC article, the report's co-author Zornitza Todorova noted that the humanoid robotics market is on a strong growth trajectory, with its value projected to climb to $200 billion by 2035 from an estimated $2 billion-$3 billion today.
Barclays, in its report, describes humanoid robots as "Automation 3.0," arguing that the technology could help address structural labor shortages across the global economy.
The bullish outlook is not limited to Barclays. Wedbush Securities’ Dan Ives also sees enormous potential in the emerging technology, describing humanoid robots as "one of the biggest market opportunities in the AI Revolution," as quoted by the CNBC article. Ives believes the market could be worth trillions of dollars over the coming decade, with the potential to fundamentally change how businesses operate and how consumers interact with technology.
Adding to the growing optimism surrounding the sector, Jensen Huang added to the technology’s long-term potential. The NVIDIA CEO, as quoted on another CNBC article, believes physical AI could ultimately represent a market worth tens of trillions of dollars. He expects robust growth in the robotics segment over the next five years.
OpenAI has also signaled its growing interest in the space. In a recent post on X, CEO Sam Altman announced the launch of a dedicated robotics division, OpenAI Robotics, further highlighting the industry's increasing focus on bringing AI into the physical world, as quoted on Yahoo Finance.
ETFs to Capture the Humanoid Robotics Megatrend
The following ETFs offer diversified exposure to companies that could benefit as physical AI evolves into a potentially multi-trillion-dollar opportunity.
Investors can consider Roundhill Humanoid Robotics ETF HUMN, KraneShares Global Humanoid Robotics and Physical AI Index ETF KOID, Themes Humanoid Robotics ETF BOTT, Global X Robotics & Artificial Intelligence ETF BOTZ and ROBO Global Robotics and Automation Index ETF ROBO.
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ROBO Global Robotics and Automation Index ETF (ROBO): ETF Research Reports
Global X Robotics & Artificial Intelligence ETF (BOTZ): ETF Research Reports
Themes Humanoid Robotics ETF (BOTT): ETF Research Reports
KraneShares Global Humanoid Robotics and Physical AI Index ETF (KOID): ETF Research Reports
This article originally published on Zacks Investment Research (zacks.com).