Tesla’s Optimus is a high-profile example of recent innovation in robotics. - X screenshot

Industrial robots have been around for decades. They’re often used on manufacturing lines, where they perform automated tasks. But as artificial intelligence is deployed across various sectors, the robotics industry is expected to boom, creating rich opportunities for investors looking for new horizons.

Robots are the physical manifestation of AI, said Tejas Dessai, director of research at Global X ETFs. While Tesla Inc.’s TSLA Optimus is a high-profile example, in reality, general-purpose humanoids that can do just about any task will arrive in a more distant future. For now, it’s about taking automated robots that are performing repetitive tasks and making them aware of their physical surroundings. This would enable them to perform a wider range of duties autonomously, whether it’s on assembly lines, in warehouses or in surgeries.

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Over time, training these robots will get cheaper. So as they become more sophisticated and affordable, it opens up a breadth of applications that can be deployed across industries. This makes the intersection of robotics and AI one of the most disruptive and innovative spaces in the technology and industrial sectors, Dessai said.

Below are two charts that show the trend in costs for human wages versus robotic setups between 2008 and 2030. As wages over the period are projected to increase by about 125%, the average cost of industrial robots could decrease by 58%. The trend is expected to increase demand for robots.- Global X, Outlook For 2025 And Beyond

AI and robotics, looked at separately, have very different markets, said Zeno Mercer, an analyst at VettaFi. The former is driven by hyperscalers and big spending in data centers; the latter is tied to the traditional manufacturing sector, which is undergoing its own global shift as Washington pushes for increased tariffs. It means that big players like Apple Inc. AAPL need to expand their supply chains across the globe as well as domestically — and AI is expected to jumpstart that process with robotics in the mix, Mercer said.

Investing in the sector

Investing in innovation requires an understanding of the S-curve of adoption, which is a model that demonstrates how new technology penetrates society. The first stage starts with the innovators, followed by early adopters, then early majority, then late majority and, finally, the laggards. Accelerated adoption of a new technology tends to take off in the early-majority stage.

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Dessai said that AI-robotics companies tend to fall more in the early-majority stage of adoption, while general-use humanoid robotics are in the innovators stage. With this in mind, investing in this sector isn’t for those looking for a 12-month return; these technologies have a long way to go as they penetrate new markets and reach their wider potential. Dessai noted that these investments are more suited for those who have a 10-year investment horizon and are comfortable sitting through significant volatility along the way.

Below is an illustration of the S-curve of adoption that marks where Global X estimates different technology sectors are in their current cycle.- Global X

MarketWatch reviewed two exchange-traded funds focused on the intersection of AI and robotics: the Global X Robotics and Artificial Intelligence ETF BOTZ and the Robo Global Robotics and Automation Index ETF ROBO. Together, the two ETFs hold 106 stocks of companies operating within the AI space. We narrowed the list to companies covered by at least nine analysts polled by FactSet, and for which consensus revenue estimates were available at least through 2026.

We used calendar-year sales figures and estimates as adjusted by FactSet for companies whose fiscal reporting periods don’t match the calendar. The last column reflects the 12-month potential upsides based on analysts’ price targets, among those polled by FactSet,

Here are the 19 companies for which the estimates drive the highest projected compound annual growth rates (CAGR) for sales from 2024 through 2026:

Company Ticker Two-year estimated sales CAGR through 2026 12-month upside potential implied by consensus price target RoboSense Technology Co. Ltd HK:2498 53.1% 24% Hesai Group HSAI 51.2% 40% Nvidia Corp. NVDA 39.7% 19% Procept BioRobotics Corp. PRCT 38.0% 43% Xiaomi Corp. Class B HK:1810 XIACY 27.8% 32% Symbotic Inc. SYM 23.9% 13% Samsara Inc. IOT 22.8% 1% Estun Automation Co. Ltd. Class A CN:002747 22.7% -17% Shenzhen Inovance Technology Co. Ltd. CN:300124 22.4% 11% C3.ai Inc. AI 20.6% 25% ServiceNow Inc. NOW 18.8% 5% Ambarella Inc. AMBA 16.5% 30% Intuitive Surgical Inc. ISRG 15.6% 2% Celestica Inc. CLS CA:CLS 15.5% 4% Hon Hai Precision Industry Co. Ltd. TW:2317 15.3% 28% Dynatrace Inc. DT 15.2% 18% Delta Electronics Inc. TW:2308 14.9% 20% Advantech Co. Ltd. TW:2395 14.5% 15% Autodesk Inc. ADSK 12.2% 8% Source: FactSet

Top of the list is Chinese company RoboSense Technology HK:2498, which specializes in laser vision and dexterous hands, as well as hand-and-eye coordination for robots. Dessai said that its proprietary light detection and ranging, or LiDAR, systems are among the most advanced in the market. The company has over 2,600 customers globally and deep partnerships with automotive original equipment manufacturers.

Symbotic SYM makes the hardware and software needed to automate a warehouse. In January, the company acquired Walmart Inc.’s WMT Advanced Systems and Robotics business and secured a contract with the retail gaint to provide the automation for its warehouses.

Nvidia NVDA doesn’t need an introduction as a leading AI player. It has been well positioned as a key supplier of leading graphics processing units. However, physical intelligence — where autonomous machines like robotics, vehicles and smart cities are able to interact with their surroundings — is the company’s next frontier, said Mercer.

Chinese company Xiaomi HK:1810 XIACY is winning in a lot of different areas as a manufacturer of everything from smartphones and home electronics to electric vehicles. It’s also developing its own humanoid model and chips. However, the company as a whole is undervalued relative to counterparts like Apple, Mercer said.

Intuitive Surgical ISRG is a global leader in surgical robotics, Dessai noted. The company provides robotic systems, instruments and software analytics, and it has a high-margin business with recurring revenue. Its Da Vinci platform helps perform over 2 million minimally invasive procedures every year, he added.

While investing in foreign stocks has its own set of considerations, including different regulatory landscapes and the risk of stocks being delisted, Mercer looks at that dynamic differently.

“We think there’s actually a risk of not investing in these companies, because a lot of them are relatively undervalued,” he said, when comparing them to peers in other geographies like North America and looking at various forward multiples.

Philip van Doorn contributed to this article.

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