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Yesterday, I introduced the idea that artificial intelligence is beginning to leave the data center and enter the physical world.
That shift is what NVIDIA (NVDA) CEO Jensen Huang calls Physical AI, and I believe it will become one of the defining investment themes of the next decade.
Today I’d like to answer a different question.
Why are companies suddenly investing billions of dollars in robots?
There’s probably no better example than Amazon (AMZN).
Today, the company operates more than one million robots across its global fulfillment network, making it one of the largest users of robotics anywhere in the world.
If you’ve ordered something from Amazon recently, there’s a good chance your package was moved, sorted, or transported by one of those machines before it ever reached a delivery truck.
It’s a remarkable transformation when you consider that just over a decade ago, Amazon’s robotics efforts were limited to relatively simple machines moving inventory shelves around warehouses.
The reason Amazon continued expanding its robotic workforce wasn’t because it wanted futuristic-looking fulfillment centers. It did so because the investment generated real economic returns.
Robots help move heavy inventory, perform repetitive tasks, improve workplace safety, and allow employees to focus on jobs requiring problem-solving and decision-making. When a technology improves productivity and lowers costs, companies don’t just buy a few of them, they buy as many as make economic sense.
I think that’s the biggest misconception surrounding robotics today. Most people assume companies are investing in robots to replace workers. I see it differently.
The robotics revolution isn’t happening because companies want robots. It’s happening because they need productivity.
Look across the global economy and the reasons become obvious. Developed countries are dealing with aging populations, manufacturers continue to struggle finding skilled labor, hospitals face staffing shortages, and farmers increasingly have difficulty hiring seasonal workers.
At the same time, wages continue to rise while businesses are under constant pressure to improve efficiency.
When you’re paying someone $20 an hour to flip burgers or drop fries into a vat of oil, robotics starts looking a lot less like science fiction and a lot more like common sense.
The future begins now. We’ll see robots spread into nearly every major industry over the coming decade.
Manufacturing will continue to lead the way, but warehouses are already becoming highly automated, hospitals are adopting robotic-assisted surgical systems, autonomous equipment is transforming agriculture, and mining companies are deploying driverless haul trucks in some of the world’s most remote locations.
We’re seeing firsthand that defense contractors are investing heavily in intelligent drones and robotic systems capable of operating in environments too dangerous for humans.
Each application looks different, but they’re all solving the same problem: helping businesses produce more with fewer constraints.
One of the mistakes investors often make is assuming robots need to perform every task a human can do before they’ll become commercially successful. History suggests otherwise…
The first smartphones didn’t replace laptops. The first electric vehicles didn’t eliminate gasoline-powered cars. Cloud computing didn’t replace every corporate server overnight.
New technologies almost always begin by solving a handful of problems exceptionally well before gradually expanding into broader applications.
Robotics will follow that same path. A warehouse robot doesn’t need to perform surgery, and a surgical robot doesn’t need to harvest crops. If a machine can perform one repetitive task more efficiently, more safely, or at a lower cost than existing methods, the return on investment becomes compelling.
That’s already happening today, and as artificial intelligence continues to improve, those returns should only get better.
For investors, that raises an important question. If millions of robots are eventually deployed across factories, hospitals, warehouses, farms, and construction sites, who will supply the sensors, motors, cameras, precision gears, software, and other technologies that every one of those machines depends on?
That’s where the next layer of this story begins, and tomorrow we’ll start looking at the companies quietly building the backbone of the Physical AI revolution.
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