Cathie Wood Says Humanoid Robotics Are a $24 Trillion Opportunity. Here’s 1 “Magnificent Seven” Stock You Won’t Want to Miss If She’s Right.
Over the last couple of years, artificial intelligence (AI) has widely been touted as the next frontier in software development, semiconductor chips, and machine learning. However, some of the more closely followed use cases in AI tend to revolve around self-driving cars, data analytics, and cloud computing.
But what if I told you that there’s a $24 trillion opportunity in AI that’s flying totally under the radar?
Below, I’ll explore a report published by technology enthusiast and CEO of Ark Invest, Cathie Wood, in which she outlines the prospects of humanoid robotics. Moreover, I’ll detail several companies making inroads in this technology and tell you which member of the “Magnificent Seven” is the best opportunity in humanoid robots.
Humanoid robots could be a $24 trillion opportunity
You may think that humanoid robots are something out of science fiction or a Hollywood thriller film. Such robots have existed primarily in movies and fictional books until now.
Thanks to a host of ambitious entrepreneurs and technologists, however, actual humanoid robots might not be too far away. According to Wood’s research, they have two broad applications: households and manufacturing. Both represent a $12 trillion market opportunity in her eyes. Consider this recent post by Brett Adcock, tech entrepreneur and founder of a start-up called Figure AI:
ARK just released a report on humanoid robots
“if humanoid robots are able to operate at scale, they could generate ~$24 trillion in revenues”
Having talked to dozens of Fortune 500 companies, the size of this market is incomprehensible pic.twitter.com/9bRMzOhFEM
— Brett Adcock (@adcock_brett) September 11, 2024
The basic idea is that artificial intelligence can be used to train robots to learn basic tasks that can assist people and corporations in completing everyday responsibilities. The time saved to do mundane tasks, such as laundry and grocery shopping, or more sophisticated duties in the workplace can have an exponential impact on productivity. In turn, these efficiencies can lead to dramatic increases at scale and make material impacts on the economy.
Image source: Getty Images.
Which companies are major players in humanoid robotics?
Believe it or not, there are several leading technology companies looking to disrupt the humanoid robotics industry. Back in February, Figure AI raised $675 million from the likes of Nvidia, Microsoft, OpenAI, Intel, Jeff Bezos, and (of all people) Cathie Wood.
On Figure AI’s website, the company says there are more than 10 million “unsafe or undesirable jobs” just in the U.S. The company estimates that manual labor accounts for nearly half of gross domestic product (GDP) globally — or nearly $42 trillion per year. Some obvious use cases for humanoid robotics include warehouse settings, logistics, and even elder care, so it’s not out of the realm of possibility for this pocket of the AI arena to massively transform different aspects of labor.
Another emerging player in humanoid robotics is 1X Technologies. 1X is developing Android types of robots and has the financial backing of venture capital powerhouse Tiger Global as well as OpenAI.
One Magnificent Seven member stands out from the rest
While it’s impressive to see Microsoft and Nvidia exploring humanoid robotics, I see Tesla (NASDAQ: TSLA) as the leader in the space. Outside of its electric vehicles (EV) and battery packs, Tesla is building a humanoid robot called Optimus. The vision behind Optimus is for Tesla to integrate these robots inside its car factories to work alongside humans.
The idea is that Optimus will help bring new levels of efficiency to Tesla’s manufacturing capabilities and EV production. As a result, the EV maker may be able to produce a higher volume of cars and sell them more quickly, compared to today’s output levels.
The prospects for Optimus are particularly lucrative, considering it can complement Tesla’s existing core car business while also diversifying the entire operation since the company could commercialize the robotics business. Not too long ago, Tesla CEO Elon Musk suggested that Optimus alone could eventually be a $200 trillion opportunity.
Whether humanoid robotics are a $24 trillion market, as Wood forecasts, or a $200 trillion one, as Musk suggests, investors shouldn’t get hung up on the details just yet. Considering Optimus is set to be in production in Tesla factories next year and, per Musk, the company will be “providing Optimus robots to outside customers” by 2026, I think investors will know sooner rather than later how big robotics could be for Tesla.
I don’t think investors should view Tesla as just a car company. Musk has widespread ambitions spread across many different aspects of AI, and autonomous driving is just one (albeit huge) opportunity. A big part of the Tesla investment thesis should consider the impact that robotics might have on the company in the long run.
Tesla is a rock-solid investment choice for those looking for exposure to AI. Furthermore, considering the company’s progress in several areas leveraging AI — including humanoid robotics — I think Tesla is a good opportunity for investors with long-term time horizons. Now is a good time to scoop up shares and prepare to hold on for the ride.
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Adam Spatacco has positions in Microsoft, Nvidia, and Tesla. The Motley Fool has positions in and recommends Microsoft, Nvidia, and Tesla. The Motley Fool recommends Intel and recommends the following options: long January 2026 $395 calls on Microsoft, short January 2026 $405 calls on Microsoft, and short November 2024 $24 calls on Intel. The Motley Fool has a disclosure policy.
Cathie Wood Says Humanoid Robotics Are a $24 Trillion Opportunity. Here’s 1 “Magnificent Seven” Stock You Won’t Want to Miss If She’s Right. was originally published by The Motley Fool
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