---
title: "Embodied AI opens up a market opportunity of $402 billion! UBS elaborates on the \"Beyond AI\" investment strategy"
type: "News"
locale: "en"
url: "https://longbridge.com/en/news/259282087.md"
description: "UBS predicts that the market opportunity for embodied AI vertical industries will reach USD 402 billion, primarily driven by humanoid robots, advanced driver-assistance systems (ADAS), and robotic taxis. With an aging population and a shrinking workforce, the demand for embodied AI applications is accelerating. UBS points out that the rapid advancement of AI technology means that investors should focus on the embodied AI industry accelerated by AI, especially in sub-sectors such as industrial automation, agricultural technology, and smart glasses"
datetime: "2025-09-29T08:29:36.000Z"
locales:
  - [zh-CN](https://longbridge.com/zh-CN/news/259282087.md)
  - [en](https://longbridge.com/en/news/259282087.md)
  - [zh-HK](https://longbridge.com/zh-HK/news/259282087.md)
---

# Embodied AI opens up a market opportunity of $402 billion! UBS elaborates on the "Beyond AI" investment strategy

According to the Zhitong Finance APP, UBS recently released a research report stating that artificial intelligence (AI) is driving a leap in autonomous systems, such as humanoid robots, advanced driver-assistance systems (ADAS), and robotaxis, and is transforming traditional industries including aerospace, agriculture, smart glasses, and healthcare. Notably, the emergence of visual-language-action (VLA) models represents a transformative turning point for robots and ADAS, as they enable systems to directly convert sensory inputs and natural language instructions into motion behaviors.

UBS stated that the aging population and shrinking workforce provide scalable opportunities for embodied AI applications, such as humanoid robots and other forms of autonomous automation. The current trend of reshoring is reshaping global manufacturing, with high labor costs coexisting with labor shortages against a backdrop of anti-immigrant sentiment. In the bank's view, this accelerates the demand for the rapid adoption of embodied AI solutions that require minimal human intervention.

UBS predicts that market opportunities driven by embodied AI verticals will reach $402 billion. The bank believes that the highest growth opportunities lie in humanoid robots, ADAS, robotaxis, as well as in sub-sectors such as industrial automation, agricultural technology, smart glasses, robotic surgery, and drones. Humanoid robots and automation can largely operate independently and can become new, complementary sources of alpha that have not yet been captured by existing TRIO investment strategies.

**The Emergence Phase of High-Growth Market Opportunities**

Historically, Moore's Law posited that chip processing power would double every 18-24 months. However, the current advancements in AI are doubling approximately every seven months, triggering an "AI in motion" trend across industries. Investors should consider broadly positioning themselves in the "embodied AI" verticals accelerated by AI.

UBS believes that the highest growth opportunities lie in humanoid robots, ADAS, and robotaxis, as well as in sub-sectors such as drones, agricultural technology, smart glasses, and robotic surgery. The bank conservatively estimates that the total addressable market (TAM) for humanoid robots and automation will reach $402 billion within ten years, with a compound annual growth rate (CAGR) of 11%.

Specifically, UBS predicts that by 2035, the global TAM for humanoid robots will reach $40 billion, the global TAM for automation hardware will reach $100 billion, the TAM for ADAS (including fully autonomous driving FSD) will reach $88 billion, and the TAM for robotaxis will be $40 billion. Additionally, other AI-driven industries, including agricultural technology, robotic surgery, electric vertical takeoff and landing vehicles (eVTOL), and smart glasses, are expected to have a CAGR of 23%, reaching a TAM of $134 billion by 2035.

![11.png](https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20250929/1759133771760405.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg) **AI Progress Catalyzes the Development of Autonomous Systems**

Industrial robots and advanced industrial automation have existed for decades. However, the early 21st century saw the emergence of autonomous drones and other forms of self-driving mobile tools, which have recently made significant breakthroughs in processing power and AI. Today, these autonomous systems in vertical industries share many characteristics: overlapping hardware and software supply chains (relying on advanced semiconductors), dependence on training and data collection, and the evolution of regulatory frameworks to maximize commercialization.

**Electrification Drives Autonomous Driving**

UBS expects that by 2035, the revenue pool for private car ADAS will reach $88 billion, primarily driven by China, where the penetration rate of electric vehicles has reached 50%. This forecast is based on advancements in L4 technology, decreasing vehicle costs, and increasing consumer adoption rates. In China, the high penetration rate of electric vehicles has accelerated the rapid adoption of ADAS—L2+ intelligent driving penetration rose from 24% in 2021 to 35% in 2022, and further to 52% in 2023. Given the low global penetration rate of electric vehicles, ADAS adoption outside of China is expected to be slower, thus China will still dominate the global ADAS market by 2035. Additionally, the bank estimates that the long-term TAM for robot taxis is $40 billion, which may be a slower progressing area within autonomous systems due to reliance on mature L4 ADAS and regulatory frameworks.

**Humanoid Robots Approaching Growth Inflection Point**

UBS predicts that by 2035, the number of humanoid robots worldwide will exceed 2 million units, and by 2050, it will surpass 300 million units, corresponding to TAMs of $40 billion and $14-17 trillion, covering a complete ecosystem of components and whole machine manufacturers, software and data, production and services. Humanoid robots can walk and perceive, capable of completing simple tasks, but to be commercially viable, their efficiency must exceed that of human workers—the bank believes this development is expected to be achieved within this decade.

Simple "2B" robots can be used on factory assembly lines for tasks such as sorting items and handling parts. Tesla CEO Elon Musk intends to use Optimus robots in factories to replace blue-collar workers engaged in "tedious, repetitive, or dangerous tasks," and subsequently sell them to third parties. Outside of factories, 2B robots can also perform simple tasks in fast-food chains, restaurants, logistics, security, safety, or monitoring. More advanced "2C" general-purpose humanoid robots will be able to understand instructions and make decisions, expected to become the core of global TAM growth after 2035, with application scenarios including hospitals, healthcare, retail, and homes.

**Integration of Autonomous System Supply Chains**

UBS believes that a comprehensive understanding of the development of different autonomous systems is necessary to assess the value and growth prospects of related supply chains. The trend from electrification to intelligent/autonomous driving at the beginning of this decade has triggered a demand increase for vehicle electronics (such as autonomous driving domain controllers, high-performance chips, lidar, etc.). "Vision-Language-Action" (VLA) technology is being applied in ADAS and humanoid robots, driving demand for high-performance chips, power management chips, motion control chips, communication ICs, and lidar. 80% of robotic joint components (harmonic drives, planetary gear reducers) are produced by automotive parts companies, resulting in a high overlap between the automotive and humanoid robot hardware supply chains Both have become important demand drivers for smart glasses. Intelligent autonomous systems also rely on data collection and training, such as FSD vehicles and humanoid robots, which use simulated data to create demand for computational models and AI algorithms.

**From Edge AI to Sensor Fusion: Semiconductor Opportunities**

UBS stated that semiconductors will be the biggest beneficiaries of the increased computational intensity of humanoid robots. Humanoid robots rely on edge SoCs (system-on-chips), combining CPUs, GPUs, and NPUs to support real-time perception, planning, and control. The new generation of designs incorporates device-side language models for natural commands and reasoning; advanced sensor fusion (multi-camera, LiDAR, IMU) enables target recognition and dynamic navigation capabilities. The SoC market is dominated by NVIDIA, Qualcomm, Huawei, and AMD/Xilinx, with MediaTek, Horizon Robotics, and Alchip as emerging companies. Tesla uses automotive hardware and its self-developed large model Grok for Optimus. In addition to processors, robots also require a large amount of DRAM and SSDs to execute models and telemetry, as well as motor control units (MCUs). Overall, the bank estimates that the semiconductor value required for each high-end humanoid robot is about $1,400.

![12.png](https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20250929/1759133892347572.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg)

**Smart Glasses: Approaching a Turning Point**

Smart glasses have long been on the edge, but thanks to technological maturity, rising consumer interest, and cross-industry collaborations, the market will enter a new phase in 2025. The maturity of the supply chain has driven the average selling price (ASP) of smart glasses down to about $400, a 70% decrease from when Google Glass was released in 2013. Additionally, collaborations between tech companies and fashion brands (such as Meta+Ray-Ban, Google+Warby Parker) are accelerating adoption. Generative AI has expanded application scenarios, including real-time translation, virtual assistants, and landmark recognition. The bank expects that in 2026, Meta, Google, Snap, and Apple will launch products. The market size is projected to reach $1 billion in 2025 and $60 billion by 2035, with the number of users reaching 320 million.

**Investing in the Next Agricultural Revolution: AI and Future Agriculture**

UBS stated that more than half of the world's habitable land is used for agriculture, but by 2050, food production needs to increase by 60% to feed about 10 billion people, with an expected food shortfall of 1.4 billion tons, equivalent to 23% of global demand. Therefore, it is necessary to rely on autonomous machinery, AI, and digital platforms to enhance productivity. Fully automated equipment, such as harvesters, can operate without human intervention, optimizing operations and reducing costs; AI-driven spraying systems and robotic units provide precise application and reduce chemical use; data platforms integrate satellite, drone, and sensor data to guide efficient farming. AI also helps accelerate crop protection research and development, modeling molecular interactions to achieve faster and more sustainable solutions **AI-Enhanced Robotic Surgery**

Robotic surgery has expanded from urology and gynecology to cardiology, gastroenterology, and neurosurgery, enhancing the precision and flexibility of doctors. According to data from the International Federation of Robotics, 6,200 new medical robots are expected to be shipped in 2024, a year-on-year increase of 36%. Generative AI is driving broader adoption: personalized 3D models can be generated preoperatively, real-time error detection and process guidance can be provided during surgery, and predictions of tissue deformation and hemodynamics can be made. The demand for minimally invasive surgery is rising among patients, and robot-assisted surgery offers advantages such as smaller incisions, less pain, less bleeding, fewer complications, and faster recovery. AI can also accelerate doctors' learning through immersive virtual training.

**The Future of Urban Air Mobility**

Electric Vertical Takeoff and Landing (EVTOL) aircraft are approaching commercialization, especially with policy support in China. Technological breakthroughs (high-density batteries, autonomous flight, distributed electric propulsion) enable safe, quiet, and low-cost operations. Initial applications are expected in air tourism, potentially being 65% cheaper than helicopter tours by 2030. As infrastructure matures, it will expand into urban air mobility, emergency response, and regional logistics. UBS estimates that the global EVTOL market will reach $23 billion by 2035.

**Investing in "Beyond AI"**

Aging populations and labor shortages are creating unprecedented gaps in global manufacturing and service industries, accelerating the demand for embodied AI such as humanoid robots. The VLA model acts as a catalyst, allowing systems to directly convert sensory and linguistic inputs into actions. In addition to humanoid robots, the technological maturity in areas such as ADAS, robotic taxis, EVTOL, and robotic surgery is also driving regulatory turning points, becoming a growth driver.

![13.png](https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20250929/1759134020670390.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg)

UBS recommends that investors broadly allocate to vertical industries related to embodied AI, including humanoid robots, ADAS, robotic taxis, as well as sub-sectors like industrial automation, agricultural technology, smart glasses, robotic surgery, and drones. The humanoid robot ecosystem encompasses chip manufacturers, software developers, component manufacturers, complete machine manufacturers, automotive companies, ADAS developers, battery manufacturers, and end users. System integrators in agriculture, healthcare, smart glasses, and drones also provide high-risk, high-reward opportunities. In the medium term, industries adopting these technologies are expected to achieve significant productivity gains and profit improvements, particularly in developed economies facing labor shortages, with the service and healthcare sectors likely to benefit first.

UBS notes that its thematic portfolio includes 38 stocks, including Alibaba (BABA.US), Hesai (HSAI.US), Autodesk (ADSK.US), Emerson Electric (EMR.US), Honeywell (HON.US), Rockwell Automation (ROK.US), Intuitive Surgical (ISRG.US), Johnson & Johnson (JNJ.US), and Stryker (SYK.US), among other U.S. listed companies UBS added that this thematic portfolio differs from other global thematic strategies, with a tracking error higher than MSCI ACWI, reflecting intentional differentiated allocation. The bank expects that the revenue and profit of this stock portfolio will accelerate growth again next year, achieving two consecutive years of profit acceleration. In terms of valuation, the expected price-to-earnings ratio premium of this stock portfolio compared to the global stock market is lower than the ten-year average. On a macro level, the Federal Reserve's continued interest rate cuts also constitute a supportive factor.

![15.png](https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20250929/1759133801618718.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg)

![16.png](https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20250929/1759133807197640.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg)

![17.png](https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20250929/1759133811765118.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg)

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