Wall Street Bets on Physical AI: Robots and AV Stocks

Wall Street investors are shifting attention to physical AI — robots, autonomous vehicles and humanoid machines. Capital is moving into companies and funds that supply sensors, testing equipment and industrial automation systems.

Industry strategists and technology executives point to physical AI as the next phase after the recent surge in generative AI. Raisah Rasid, global market strategist at JP Morgan Asset Management, called AI “a story that is going to be here to stay for a long time” and noted rapid adoption of generative systems.

Masayoshi Son, founder of SoftBank, expects physical AI and robotics to produce the next trillion-dollar company. Barclays projects the humanoid robotics market could grow from about $2 billion to $3 billion today to roughly $200 billion by 2035. Barclays expects adoption in two phases: through 2030 focused on manufacturing, logistics, agriculture and construction, and after 2030 expanding into healthcare, elderly care, education and hospitality.

Nvidia Chief Executive Jensen Huang described robotics as the company’s second-largest long-term growth opportunity after AI and said autonomous vehicles are likely to be the first major commercial application. During a visit to South Korea last month he highlighted the country’s manufacturing base as a place to apply robotics technology.

China leads in industrial-robot deployments, installing about 300,000 industrial robots annually compared with roughly 34,000 in the United States. Barclays reports robot density has risen about 600% since 2016 to nearly 500 robots per 10,000 workers.

Public-market investors are targeting listed suppliers because many advanced humanoid developers remain private. Ouster, a maker of digital lidar sensors, had its Rev8 OS family qualify for Nvidia’s DRIVE Hyperion autonomous vehicle platform. Ouster shares have risen more than 90% this year and trade near $44.64. The company reported first-quarter product revenue of $48.23 million, up 55% year over year, total revenue up 49%, a 43% gross margin and shipment of more than 12,600 sensors. Analysts note Ouster remains unprofitable and trades at over 23 times sales; the consensus rating is Hold.

Teradyne, which makes semiconductor test equipment and industrial automation products, reported $1.11 billion in first-quarter revenue from its Semiconductor Test division and $91 million from its robotics business. Teradyne shares are up more than 66% this year and over 280% in the past 12 months. Management’s second-quarter revenue guidance of $1.15 billion to $1.25 billion implies a sequential moderation; analysts point to valuation concerns and the potential impact of lower AI infrastructure spending or tighter export controls on China.

RoboStrategy listed in May as a closed-end fund dedicated to physical AI and robotics. The fund holds stakes in public and private companies including Figure AI, Apptronik, Dyna Robotics, Standard Bots and Dexmate, and has a committed equity facility of up to $2 billion from Roth Principal Investments. RoboStrategy shares have fallen more than 13% since listing.

With many robotics and humanoid developers still private, public-market investors are focusing on enabling technologies, testing equipment, industrial automation and thematic funds to gain exposure to physical AI.