UBS recently published a research report indicating that artificial intelligence (AI) is driving breakthrough developments in autonomous systems, including humanoid robots, Advanced Driver Assistance Systems (ADAS), and robotaxis, while transforming traditional industries such as aerospace, agriculture, smart glasses, and healthcare. Notably, the emergence of Vision-Language-Action (VLA) models represents a transformative turning point for robotics and ADAS, as they enable systems to directly convert sensory inputs and natural language instructions into motion behaviors.

UBS states that population aging and labor force contraction provide scalable opportunities for embodied AI applications, such as humanoid robots and other forms of autonomous automation. Current reshoring trends are reshaping global manufacturing, with high labor costs coexisting with labor scarcity against a backdrop of anti-immigration sentiment. The firm believes this accelerates the rapid adoption demand for embodied AI solutions requiring minimal human intervention.

UBS predicts that market opportunities driven by embodied AI vertical industries will reach $402 billion. The firm identifies the highest growth opportunities in humanoid robots, ADAS, robotaxis, as well as industrial automation, agricultural technology, smart glasses, robotic surgery, and drone segments. Humanoid robots and automation can largely operate independently and could become new, complementary alpha sources not yet captured by existing investment strategies.

**Embryonic Stage of High-Growth Market Opportunities**

Historically, Moore's Law suggested that chip processing power would double every 18-24 months. However, current AI progress approximately doubles every seven months, triggering an "AI in motion" trend across industries. Investors should consider broad positioning in embodied AI vertical industries accelerated by AI advancement.

UBS believes the highest growth opportunities lie in humanoid robots, ADAS and robotaxis, as well as drones, agricultural technology, smart glasses, and robotic surgery segments. The firm conservatively estimates that the Total Addressable Market (TAM) for humanoid robots and automation will reach $402 billion within a decade, with an 11% compound annual growth rate.

Specifically, UBS predicts that by 2035, global humanoid robot TAM will reach $40 billion, global automation hardware TAM will reach $100 billion, ADAS (including Full Self-Driving) TAM will reach $88 billion, and robotaxi TAM will be $40 billion. Additionally, other AI-driven industries including agricultural technology, robotic surgery, electric vertical takeoff and landing aircraft (EVTOL), and smart glasses are expected to achieve a 23% compound annual growth rate, with 2035 TAM reaching $134 billion.

**AI Progress Catalyzes Autonomous System Development**

Industrial robots and advanced industrial automation have existed for decades. However, the early 21st century saw the emergence of autonomous drones and other forms of autonomous mobile tools, with recent significant breakthroughs in processing power and AI. Today, these autonomous system vertical industries share many characteristics: overlapping software and hardware supply chains (relying on advanced semiconductors), dependence on training and data collection, and the need for regulatory framework evolution to maximize commercialization.

**Electrification Drives Autonomous Driving**

UBS expects the revenue pool for private vehicle ADAS to reach $88 billion by 2035, primarily driven by China, where electric vehicle penetration has reached 50%. This forecast is based on L4 technology advancement, vehicle cost reduction, and increased consumer adoption rates.

In China, high electric vehicle penetration has driven rapid ADAS adoption—L2+ intelligent driving penetration rose from 24% in 2021 to 35% in 2022, and further to 52% in 2023. Given lower global electric vehicle penetration rates, ADAS adoption outside China is expected to be slower, making China likely to maintain a dominant share of the global ADAS market through 2035.

Furthermore, the firm expects robotaxis to have a long-term TAM of $40 billion, but due to dependence on mature L4 ADAS and regulatory frameworks, this may be the slowest-progressing area among autonomous systems.

**Humanoid Robots Approaching Growth Inflection Point**

UBS predicts that by 2035, global humanoid robot numbers will exceed 2 million units, rising to over 300 million units by 2050, corresponding to TAMs of $40 billion and $1.4-1.7 trillion respectively, covering the complete ecosystem of components and system manufacturers, software and data, production and services.

Humanoid robots can walk, perceive, and complete simple tasks, but to achieve commercial viability, their efficiency must exceed that of human workers—the firm believes this development is expected to be achieved within this decade.

Simple "B2B" robots can be used in factory production lines for tasks such as sorting items and moving parts. Tesla CEO Elon Musk intends to use Optimus robots in factories to replace blue-collar workers performing "boring, repetitive, or dangerous tasks," and subsequently sell them to third parties.

Beyond factories, B2B robots can also perform simple tasks in fast-food chains, restaurants, logistics, security, or surveillance. More advanced "B2C" general-purpose humanoid robots will be able to understand instructions and make decisions, expected to become the core of global TAM growth after 2035, with applications including hospitals, healthcare, retail, and homes.

**Convergence of Autonomous System Supply Chains**

UBS believes comprehensive understanding of different autonomous system developments is necessary to assess the value and growth prospects of related supply chains. The trend from electrification to intelligent/autonomous driving at the beginning of this decade triggered demand growth for automotive electronics (such as autonomous driving domain controllers, high-performance chips, and LiDAR).

Vision-Language-Action (VLA) technology is being applied to ADAS and humanoid robots, driving demand for high-performance chips, power management chips, motion control chips, communication ICs, and LiDAR. 80% of robot joint components (harmonic and planetary reducers) are produced by automotive component companies, creating highly overlapping supply chains between automotive and humanoid robot hardware. Both also serve as important demand drivers for smart glasses.

Intelligent autonomous systems similarly require data collection and training, such as FSD vehicles and humanoid robot training both using simulation data, creating demand for computational models and AI algorithms.

**From Edge AI to Sensor Fusion: Semiconductor Opportunities**

UBS states that semiconductors will be the biggest beneficiaries of increased computational intensity in humanoid robots. Humanoid robots rely on edge SoCs (System-on-Chip), combining CPU, GPU, and NPU to support real-time perception, planning, and control. New generation designs incorporate on-device language models for natural commands and reasoning; advanced sensor fusion (multiple cameras, LiDAR, IMU) provides object recognition and dynamic navigation capabilities.

The SoC market is dominated by NVIDIA, Qualcomm, Huawei, AMD/Xilinx, with MediaTek, Horizon Robotics, and Alchip as emerging companies. Tesla uses automotive hardware and self-developed large model Grok for Optimus.

Beyond processors, robots also require substantial DRAM and SSD for model execution and telemetry, as well as motor control units (MCU). Overall, the firm expects each high-end humanoid robot to require approximately $1,400 worth of semiconductors.

**Smart Glasses: Approaching Inflection Point**

Smart glasses have long remained on the periphery, but benefiting from technological maturity, rising consumer interest, and cross-industry collaboration, the market enters a new phase in 2025. Supply chain maturity has driven smart glasses average selling price (ASP) down to approximately $400, a 70% decrease from Google Glass launch in 2013. Additionally, collaborations between technology companies and fashion brands (such as Meta+Ray-Ban, Google+Warby Parker) accelerate adoption.

Generative AI has expanded application scenarios, including real-time translation, virtual assistants, and landmark recognition. The firm expects Meta, Google, Snap, and Apple to launch products in 2026. Market size is $1 billion in 2025, expected to reach $60 billion by 2035, with user numbers reaching 320 million.

**Investing in the Next Agricultural Revolution: AI and Future Agriculture**

UBS states that more than half of global habitable land is already used for agriculture, but food production must increase by 60% by 2050 to feed approximately 10 billion people, with an expected food gap of 1.4 billion tons, equivalent to 23% of global demand. Therefore, productivity improvements through autonomous machinery, AI, and digital platforms are necessary.

Fully automated equipment such as harvesters can operate without human intervention, optimizing operations and reducing costs; AI-driven spraying systems and robotic units provide precise application and reduce chemical usage; data platforms integrate satellite, drone, and sensor data to guide efficient farming. AI also helps accelerate crop protection R&D, modeling molecular interactions for faster, more sustainable solutions.

**AI-Enhanced Robotic Surgery**

Robotic surgery has expanded from urology and gynecology to cardiac, digestive, and neurosurgery, improving physician precision and flexibility. According to International Federation of Robotics data, 6,200 new medical robots were shipped in 2024, up 36% year-over-year.

Generative AI drives broader adoption: preoperatively generating personalized 3D models, intraoperatively providing real-time error detection and procedural guidance, and predicting tissue deformation and hemodynamics. Rising patient demand for minimally invasive surgery benefits from robot-assisted surgery advantages including smaller incisions, less pain, reduced bleeding, fewer complications, and faster recovery. AI can also accelerate physician learning through immersive virtual training.

**Future of Urban Air Mobility**

Electric Vertical Takeoff and Landing aircraft (EVTOL) are approaching commercialization, particularly gaining policy support in China. Technological breakthroughs (high-density batteries, autonomous flight, distributed electric propulsion) enable safe, quiet, low-cost operations.

Initial applications are expected in air tourism, potentially 65% cheaper than helicopter tours by 2030. As infrastructure matures, expansion will include urban air mobility, emergency response, and regional logistics. UBS expects the global EVTOL market to reach $23 billion by 2035.

**Investing in "Beyond AI"**

Population aging and labor shortages are creating unprecedented gaps in global manufacturing and service industries, accelerating demand for embodied AI such as humanoid robots. VLA models serve as catalysts, enabling systems to directly convert sensory and linguistic inputs into actions.

Beyond humanoid robots, technological maturity in ADAS, robotaxis, EVTOL, and robotic surgery is also driving regulatory inflection points, becoming growth drivers.

UBS recommends investors broadly position in embodied AI vertical industries, including humanoid robots, ADAS, robotaxis, as well as industrial automation, agricultural technology, smart glasses, robotic surgery, and drone segments.

The humanoid robot ecosystem encompasses chip companies, software developers, component manufacturers, system integrators, automotive companies, ADAS developers, battery manufacturers, and end users. System integrators in agriculture, healthcare, smart glasses, and drone sectors also provide high-risk, high-reward opportunities.

Medium-term, industries adopting these technologies are expected to achieve significant productivity improvements and profit enhancement, particularly in developed economies facing labor shortages, with service and healthcare sectors benefiting first.

UBS notes that its thematic portfolio includes 38 stocks, including Alibaba (BABA.US), Hesai Technology (HSAI.US), Autodesk (ADSK.US), Emerson Electric (EMR.US), Honeywell (HON.US), Rockwell Automation (ROK.US), Intuitive Surgical (ISRG.US), Johnson & Johnson (JNJ.US), and Stryker (SYK.US), among other US-listed companies.

UBS adds that this thematic portfolio differs from other global thematic strategies, with tracking error higher than MSCI ACWI, reflecting intentional differentiated allocation. The firm expects the stock portfolio to resume accelerated revenue and profit growth next year, achieving consecutive two years of earnings acceleration. In terms of valuation, the stock portfolio's expected P/E premium relative to global equity markets is below the ten-year average. At the macro level, continued Federal Reserve rate cuts also constitute a supportive factor.