Robots pave way for trillion-dollar market: Barclays

BY 2035: Robotics and ‘physical AI’ are the foundation for a value chain that will be more diverse and deeper than the first wave of AI products, the analysts said

The market for artificial intelligence (AI)-powered robots and autonomous machines has the potential to balloon into a trillion-dollar opportunity by 2035, orders of magnitude bigger than it is now, according to a team of Barclays PLC analysts.

Autonomous vehicles, which are already relatively advanced, will lead the way, followed by drones and then more complicated general-purpose humanoid robots, the analysts wrote in a report on Tuesday titled “The Decade of the Robot.”

“Advances in brains, brawn and batteries are pushing AI-enabled robotics to an inflection point, setting the investment agenda for the next decade,” wrote the team led by Zornitsa Todorova, head of thematic fixed-income research at Barclays.

The development of robotics and other real-world, “physical AI” marks a paradigm shift from digital-focused AI, one that lays the foundation for a “value chain” that will be more diverse and deeper than the first wave of AI products, they said.

While China currently dominates humanoid and industrial robot deployment, the Barclays analysts identified close to 200 public issuers that could be involved in the theme over the next decade, including 100 with at least one corporate bond outstanding.

“We see automakers emerging as potential major participants, alongside growing deployment of robotic systems across warehousing, logistics and retail,” they wrote.

Examples include Mercedes-Benz Group AG’s use of Nvidia Corp’s Omniverse to “virtually retool factories with minimal disruption” and Tesla Inc’s focus on robots during its fourth-quarter earnings call.

The team highlighted the software and hardware underpinning the technology, including semiconductor and infrastructure providers such as Taiwan Semiconductor Manufacturing Co (台積電), Samsung Electronics Co and Nvidia Corp. They also flag “robotic hardware and motion systems that perform physical tasks,” along with batteries, which “provide the energy backbone for these platforms,” citing Chinese manufacturers like EVE Energy Co (億緯鋰能) and Contemporary Amperex Technology Co (寧德時代).

The Barclays analysts also point to a group they call enablers, which are companies that either build full robots, like Tesla, or “shape the broader ecosystem” by developing technology, like Amazon.com Inc.

A shift toward physical AI is already showing in large-scale logistics and retail operations at companies such as Amazon and Walmart Inc. They said Amazon has more than 1 million robots operating in its fulfillment network, “which is likely still only a fraction of the long-term potential.”