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BARCLAYS SAYS HUMANOID ROBOTS TO POWER THE NEXT AI INNOVATION WAVE

Investments in the humanoid market could reach the $200 billion mark by 2035, unlocking immense potential for companies associated with robot-manufacturing and leading the second artificial intelligence wave, strategists at Barclays said.

While adoption is expected to remain gradual till 2030, the brokerage expects the $3 billion market today to reach $40 billion over the next decade or under the most optimistic scenarios climb as high as $200 billion.

The biggest gainers include a unique set of companies not privy to the first AI wave such as actuator system makers and component suppliers of motors, gears, and bearings, as well as industrial automation leaders and producers of sensors.

"While hyperscalers and semiconductor firms should benefit as well, we think this opportunity is unique: many of these industrial players were not central to the first wave of AI growth, which focused on model building and software," Barclays said.

As large investments augment the sophistication of the nascent technology, robots might soon take on the "tough, repetitive jobs humans increasingly avoid" and work alongside people, as part of the workforce.

Increasing adoption of physical AI could also feed into advancements in defense technologies as countries develop advanced robots for combat and bomb disposal that merge civilian and military robotics.

"As budgets (global defence) surge, the overlap between physical AI and defence tech should only deepen, amplifying demand for critical materials and advanced components," said Barclays in a note.

Barclays also sees investment opportunities in mining companies owing to the heavy reliance on critical minerals and rare earths for the manufacturing of these robots.

Efforts to diversify supply chains beyond China, which provides a lion's share of the commodity, will create a structural tailwind for mining companies outside China.

(Kanchana Chakravarty)

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