Well, an army of robots won't be marching through towns looking to get humanity. That's according to a Truth Social post from Trump this month. While the artificial intelligence race is still driven by the physical, and for leaders such as chip makers and hyperscalers, the push for physical AI is on the horizon.
And with Elon Musk predicting there will be more humanoids than people by 2040, physical AI will be seen all over the world in the form of autonomous factory assembly, as well as warehouse picking and self driving cars, delivery bots and autonomous flight systems. Meanwhile, robotic surgical assistants, as well as smart prosthetics that adapt to a user's gait and terrain.
While some tech bulls have long term projections for Tesla hitting $2,000 plus because of humanoids. China is dominating shipments in this area right now, and in the first half of the year, Chinese vendors accounted for over 97% of these global shipments. And with Trump an AI leader, Jensen Huang, pledging not to slow down the AI race.
What is the plan among U.S. companies to catch up when it comes to humanoids? Well, joining us to break down the robotics investment ecosystem as well as the tech race is Mark Weinstein, who is co founder and CEO of Robo Strategy and general partner at Mechanism Capital. Good morning, and thank you so much for joining us.
So let's dive in. Robotics have moved from a far off sci fi promise to a core industrial driver. So how large is the U.S. robotics as well as physical AI market today? And why is capital flooding into the sector right now?
First of all, Remy, thank you so much for having me. And you're absolutely right. We've reached a major inflection point in the robotics and physical AI industry, driven mostly by world model development. And the robotics space is likely nearing its GPT three moment. The reason we started Robo Strategy is because we believe this is the largest total addressable market opportunity in the world.
$10 trillion potential market cap here. The entire global labor force can be mechanized in the future. And if you think about folks like Elon Musk saying there's going to be billions of robots in the world and talking about data centers in space, who's going to be building those data centers in space?
It's going to be robots.
Yeah. And, Mark, of course, we don't have a crystal ball and we can't predict the future just yet. But new data from the International Federation of Robotics showing that China did install 354,000 industrial robots last year, and that was accounting for about 59% of the entire global total, as well as nearly ten times the U.S. in terms of installation.
So given what's happening with geopolitics right now, as well as China installing more robots than the rest of the U.S., what must U.S. companies actually be doing right now to overcome this massive scale gap?
So I think that the U.S. will continue to lead in the areas where the U.S. has always led, which is innovation. On the software front, this is model development. If we look at the AI race, there's no question that the two leaders are Anthropic and OpenAI as far as model development. And we believe that from an intelligence standpoint, the U.S. is still far ahead of China.
It's one thing to show demos where robots are doing discrete tasks like a backflip, which is very impressive. You know, for our eyes, for our human eyes to see. But the kind of holy grail of robotics is generalized robotics. So being able to unbox a humanoid robot in any home in the country and have it never been there in that space, and start doing generalized tasks like folding your laundry, doing your dishes, making your bed, etc.
Yeah. And Mark, as a venture investor, how do you navigate this tension between international regulatory threats and national security compute races?
It's definitely challenging. I mean, we have the ability to invest overseas. Rover Strategy can invest in public equities as well as private equities. So we are looking to Europe. We are looking to Korea. We are also evaluating Chinese companies. But there are kind of regulatory restrictions for U.S. investors entering China as well as for Chinese investors entering the U.S.
And we view this as a national defense imperative. So just like the automobile race, where you don't see millions of BYD cars in the United States, and you likely won't see BYD cars in the U.S. anytime soon, we don't expect a world where the majority of humanoid robots or specialized robots in the U.S. are manufactured in China, and so what U.S. companies are doing is starting to scale local manufacturing.
This is a major part of the reshoring trend. We're watching teams kind of build in states that are just like with data centers, providing benefits to manufacturers that are focused on reshoring and focused on bringing jobs to America, etc.
Yeah, and of course, whether we're talking about robotics or artificial intelligence, we want to know where the growth is coming from. And I understand you focus on high growth sectors across the robotics stack. So where are you finding the most compelling value? Is it humanoid robotics, industrial automation, defense tech or enabling components?
It's a mix. I think one note is if you look again at the AI and space industries, as a corollary, we just had $5 trillion of value creation in the private markets and public market. Investors were excluded from participating in the massive growth in Anthropic, OpenAI and SpaceX in 2013, when Facebook IPO, it was a $100 billion IPO.
Now companies are going out at $1 to $2 trillion. We're trying to give public market participants access to the highest growth companies in the robotics industry, and that growth is happening in private markets, whether it's a humanoid manufacturer or a specialized robotics company. That's where the opportunity lies, and we see growth across all of those individual sectors that you mentioned.
I think national defense is one area that's massively scaling in private markets. And then specialized robotics, where there's labor shortages of skilled, high skilled labor for building things like data centers for welding. Those are areas of very near term accelerated growth as well.
Well, Mark, we will have to wrap up the conversation for now, but I appreciate your time. Thank you so much for joining us on this Friday morning. And thank you so much for sharing all of your insights as well as your perspective.
Thank you for having me, Remy. See you soon.
Thank you. Have a great weekend.
