(Editor's Note: This article should have published on June 20, 2025, but was delayed due to a technical issue)

By Jack Hough 

Humanoid robots are hot, apparently. A China stock index of companies involved with their development is beating the world market by 16 points this year. A new report from UBS says the world will have 300 million humanoids by 2050. An earlier one from Morgan Stanley puts the number at a billion, and the size of the market by then at $5 trillion -- twice what the top 20 car makers bring in today.

There are loads of stock picks, for those so inclined. Among UBS' favorites are Nvidia; a rare-earth metals producer called Lynas; Honeywell; Taiwan Semiconductor Manufacturing; Cognex for machine vision; and Amphenol for sensors. Morgan Stanley likes Tesla, Nvidia, and Alphabet, and just published a Humanoid 100 index of companies making all sorts of robo-doodads, from planetary roller screws to harmonic reducers. For investors who want one-click exposure, there's the newly launched KraneShares Global Humanoid & Embodied Intelligence Index exchange-traded fund (ticker: KOID), which costs 0.69% a year.

It's entirely possible that this investing theme is both too late and too early; many of the stocks have run, and the production ramp might not hit big numbers for the better part of a decade. Personally, I'm an anti-themist, preferring to let an S&P 500 fund handle the Darwinian allocation of big companies strangling new markets for profits. But for the robo-curious, let me run through some basics.

Remember back when those videos popped up on YouTube with a headless four-legged robot from Boston Dynamics that could walk and jump and keep its balance when pushed? That was BigDog, created in 2005 with funding from the Defense Advanced Research Projects Agency, or Darpa. It never made it out of boot camp; the gasoline engine was deemed too loud for combat, and a battery version couldn't carry enough weight.

Today, for $1,600 in China or $2,500 on Amazon.com, you can buy a UniTree Go2 robot dog that can run, sit, shake hands, stand on its front legs and kick its back legs in the air, and even move autonomously, once the space has been mapped with Lidar. Amazon's page calls this a toy. UniTree calls it a partner.

For $16,000 in China, or just over $27,000 with U.S. shipping from RobotShop.com, you can step up to the UniTree G1 Humanoid Robot -- humanoid meaning humanlike in appearance, with two arms, two legs, a head, and optional dexterous hands. UniTree calls this an agent. It can hop on one leg, crack nuts, open bottles, and flip pancakes -- not simultaneously, so far as I know. One thing it can't do, at just over four feet tall, is reach top shelves. There's a much more advanced version that's nearly six feet tall, called H1, that starts at $90,000 in China.

In a 2013 article on robots, I highlighted three industrial players. Since then, Rockwell Automation and Switzerland's ABB have quadrupled shareholder money in dollar terms. Germany's Kuka was bought out by China's Midea, an appliance maker, in 2016. In a 2017 cover story, I mentioned those stocks along with the Robo Global Robotics & Automation ETF $(ROBO)$, which has since underperformed the market; Japan's Fanuc, which has managed to lose money; Amazon and Alphabet, which have been winners; and a chip maker that was still five years away from becoming mostly an artificial-intelligence player. "Chips from companies with videogame expertise, like Nvidia, make quick work of the heavy thinking," I wrote. That one is up more than 5,000%.

Those stories were mostly about hulking mechanical factory arms that perform specific, repetitive tasks. The rise of robots in humanoid form makes sense in part because, as Nvidia founder and CEO Jensen Huang has explained it, "We built the world for ourselves." Early versions can perform factory work like sorting items and carrying boxes. The endgame, according to Morgan Stanley, is lifelike robots performing generalist roles: think firefighting, nursing, cleaning, and companionship. It reckons that by 2050, capable humanoid robots will cost around $50,000 in rich countries, and $15,000 in low- and middle-income ones.

China's players are getting a government nudge. Last year, the country's Ministry of Industry and Information Technology issued guidelines for humanoid robot production, with the goal of making them an important element of economic growth by 2027. In the U.S., Tesla plans to release a humanoid robot called Optimus by next year, costing less than a car. One way to compare humanoid robots is with hand movement, and what's called degree of freedom. Human hands have a DoF of 27. The entry-level UniTree robot can be upgraded to a DoF of seven. Tesla's latest Optimus prototype has one of 22.

The highest-value part of humanoid robots will likely be the data models, called VLA for vision-language-action. These can be trained using videos and simulated data, but the best model training comes from time-consuming laboratory work involving humans wearing sensors. China has a manpower advantage there, analysts say, while the U.S. leads on chips. Tesla has an opportunity to become an integrated robot maker that controls its own VLA model.

One thing all humanoid robots are likely to need is magnets, and those require rare-earth metals like neodymium and praseodymium, of which supplies are limited, and largely China-based. Australia's Lynas is a key producer of both of these, and another UBS favorite. Lynas and a U.S. rare-earths player called MP Materials are top-five holdings in the aforementioned KraneShares ETF.

UBS expects the humanoid robot arrival to begin with a trickle -- perhaps only two million units worldwide by 2035 -- but to quickly become a flood as prices fall and capabilities improve. Maybe by then I'll be ready to try again at robot companionship. The last unit I befriended, a knockoff Roomba, kept trying to throw itself down the stairs.

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email: jack.hough@barrons.com

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June 23, 2025 21:30 ET (01:30 GMT)

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