It’s not just you. It’s really hard to keep track of everything tech these days. First, there was ChatGPT. Then, seemingly overnight, there was DeepSeek, quantum computing, new kinds of nuclear reactors, and a $500 billion Stargate project announced by the White House. Now, we can add humanoid robots.
If you feel a sense of panic trying to understand all these technologies, you aren’t alone. Investors are afraid to be left in the dust. Companies are in the same boat. In this edition of The Wide Moat Daily, we’ll do what we do best: break down a confusing investment theme into pieces you can understand and profit from.
More Players Than You Think
Why are humanoid robots just now entering the limelight? Like electric cars, the industry needed a few things sorted before they could take off. And artificial intelligence was the last piece.
Advanced robotics has been around. Materials science created the lightweight, strong, and adaptable parts needed to build robots years ago. And many robots were built for a specific, often repetitive function in a highly structured environment.
Humanoid robots, however, are exactly what they sound like… human-like. They are built to mimic human movements and interactions. Which means they can work alongside humans in many settings and adapt to different environments.
But getting to that point was not a hardware problem. It was the software. The missing link, artificial intelligence, allows robots to take that step as humanoid. For the first time, they aren’t limited to taking pictures and videos of their surroundings. They can process and react to what’s going on around them. And do so quickly enough that they are replacing factory workers.
This isn’t futuristic science fiction. It’s happening right now… in real life. China’s Xpeng, a Tesla (TSLA) rival, unveiled a humanoid robot named “Iron” in 2024 with 60 joints.
Source: Geeky Gadgets
This isn’t a cute toy for marketing. Its design allows it to move with the flexibility of a human and handle delicate parts with the intelligence to perform different tasks.
Xpeng plans on building its upcoming P7+ executive sedan solely with Iron robots. In fact, many of the leading humanoid robot designers are also pioneers in electric vehicles ("EV").
Tesla’s “Optimus” is one example of an EV manufacturer also making a humanoid robot. Another is Boston Dynamics, which is owned by South Korean giant Hyundai Motor (HYMTF), and its cutting-edge “Atlas” humanoid robot. There are over 20 different companies in the final stages of producing their version.
Some, like Xpeng’s, are designed to work in factories and replace human workers. Others, like Tesla’s, are more like a personal assistant who knows everything on the Internet and never complains about chores around the house. China and the U.S. are in the lead for now, but anything could happen.
Cost and Application
Humanoid robots that can do my taxes and mow the grass certainly sound interesting. That’s the goal of some of these robots, while others are strictly for assembly-line work. But it’ll be a lot less interesting if they cost $1 million.
While some companies have been quiet about pricing, I’ll share what I’ve found. Boston Dynamics’ Atlas is expected to have a $200,000 to $500,000 price tag (just a few years ago, it was $2 million). Unitree Robtics’ G1 humanoids are at the lower end at $40,000 to $70,000. Tesla, to its credit, seems to have the cheapest option. The Optimus is anticipated to be $20,000 to $30,000.
Even if we add an “Elon mark-up” of 20% to 30%, it’s still leading the race by a long shot. Many of the robots sold by car companies like Tesla are planning on giving buyers car-like finance options.
That means you could have your own humanoid friend and workhorse for about $300 a month. I did the math, and it came out to about $0.40 an hour. Which is much cheaper than the minimum wage around the country.
But there are some risks about the new sector you should be aware of. And it’s not the “take over the world” approach you’ll find in the movies.
First, these robots weigh similar to a human (165 to 210 pounds). That means they require a lot of power to operate and move around. The energy consumption of different models varies as much as the price of electricity in different counties. The Atlas model runs through its 3.7 kWh battery in an hour if it’s busy. Depending on how much it’s used and where you live, that will cost about $60 to $180 a month.
With all the demand for power from bitcoin and AI (including the AI powering the armies of new robots), the cost of electricity could go higher. Or local governments could restrict people from using their robot buddies all day. The City of Austin already tries to reduce my power during hot summer afternoons.
Another factor is chips. Instead of many companies, Nvidia (NVDA) dominates in the kind of chips that advanced humanoid robots need. Supply problems cause price problems, just as we saw with chip shortages (and price increases) for cars during the pandemic.
Lastly, it’s hard to predict how governments will react to widely available humanoid robots. If unions had issues with UPS (UPS), Starbucks (SBUX), and Ford Motor (F) before, wait until robots enter the picture that can be leased or financed for a few hundred bucks a month. I have a feeling they’ll be easier to negotiate with when it comes to health care and retirement benefits.
Be Slightly Afraid but Join the Club
On the low end, these robots could cost half the price of the average new car. It’s no wonder that experts believe the market for humanoid robots will at least triple in the next few years. In 10 years, Goldman Sachs predicts there could be over 11 million humanoid robots sold.
It’s worth considering an investment in one or more players in the sector. Most of these fast-growing companies are still private, like Agility Robotics and Figure AI, but we have options. Tesla (TSLA) is a diversified player and seems to have the lowest-cost product. It’s a leader in charging networks and other areas that may help expand the market for its robots.
Intuitive Surgical (ISRG) is a $217 billion market cap heavyweight leader in robot-assisted surgeries. The improvement in patient outcomes from using skilled robots is undeniable. With better robots and AI, the possibilities are endless. Nvidia (NVDA) is certain to benefit from a rapid rise in humanoid robots. They are the “it’s better to sell shovels to the gold miners” route. If Boston Dynamics’ top-end Atlas robot is more up your alley, Hyundai Motor is another diversified way to gain exposure to one of the most interesting parts of the investment world.
Regards,
Stephen Hester
Chief analyst, Wide Moat Research