Humanoid robots poised for massive growth, investors say

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Softbank CEO Masayoshi Son told CNBC this week that physical AI and robotics were where he saw the next trillion-dollar company emerging from.

Humanoid robots, designed to mimic human movement and capabilities, have been hitting headlines in recent years, from their use as baggage handlers at Japanese airports to Tesla's big bet on its Optimus humanoid.

Market watchers have predicted that the machines will change the world over the next decade and forecast that the industry will grow 100-fold, as AI's physical capabilities evolve. One investor said consumer stocks were the path to unlocking value from it.

Zornitza Todorova, head of thematic FICC research at Barclays and a co-author of the bank's "AI Gets Physical" report, told CNBC's "Squawk Box Europe" on Thursday that "it's the decade of the robot."

"Humanoid robotics is really on an upward trajectory," she said. "The size of the market today is really small, it's 2 to 3 billion [dollars], but we see it going up to $200 billion in 2035."

According to Todorova's report, published earlier this month, humanoids "are automation 3.0." The machines are designed to fill structural labor gaps, the report said, with ageing populations, urbanization and changing job preferences leaving "dirty, dull and dangerous" roles well suited to robots.

"They're [already] doing simple, well-defined tasks like lifting boxes or picking things up from the assembly line, helping to fill roles where there are not that many humans that can do the jobs," Todorova told CNBC.

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"But that said, there is a lot to be done and the technology is maturing really, really fast," she added.

"I think we are at the cusp of a transformation, we're just scratching the surface of what humanoid robots can do, and as the technology matures, as the models get better and faster at reacting to things in real time, I think we'll see a lot of applications in more services-oriented roles."

The big opportunity in Western markets is going to be when physical AI reaches services-oriented roles, she added, which is where most of the economic growth in the West is generated.

Barclays' report forecast two waves of humanoid deployment: the first is happening now and expected to last until 2030 in sectors like manufacturing, logistics, agriculture and construction, and the second after 2030 with the robots deployed in sectors including healthcare, elderly services, education and hospitality.

The report also notes that China "is the world's robotics powerhouse and innovation lab," installing around half of all industrial robots globally — nearly 300,000 versus 34,000 in the United States — and lifting robot density by 600% to nearly 500 robots per 10,000 workers since 2016.

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China also "dominates the production and deployment of humanoid robots," and accounted for 85% of installations last year, the report added, saying China was producing robots "at roughly half the cost of Western competitors, typically in the $50k range."

Jason Pidcock, who manages the £2.75 billion ($3.69 billion) Asian Income fund at asset management firm Jupiter, said that in a decade "the world will be completely different" thanks to developments in robotics.

"In 10 years' time, there will be humanoid robots all over the place," he said during a meeting at Jupiter's offices in London on May 13. "You may have one in your home. You'll certainly have friends or family members that own a humanoid robot. Factories will be full of them. The armed forces, government departments will be full of them."

Pidcock said that the rollout of the machines will dramatically improve productivity, saying that manufacturing the robots would require both hardware and software production.

"Asia will be at the forefront of providing these things, and this is a big chunk of where we are investing," he said.

How two investors are trading robotics

In the year to the end of April, Pidcock's fund has gained 49.2%. Its top holdings include Mediatek , TSMC , Samsung , Foxconn , ST Engineering and Singtel.

"We're looking for sectors that have companies in them that have the ability to evolve," Pidcock told the London event.

"We're underweight consumer discretionary as a sector because our preferred way of playing the consumer is via the tech sector. So we think over the next few years, consumers will spend more of their discretionary spending on tech products, upgrading their phone, their computer, buying the first humanoid."

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Dan Ives, managing director and senior equity analyst at Wedbush Securities, told CNBC in an email that the company believes humanoid robots "could represent one of the biggest market opportunities in the AI Revolution."

"This is the golden goose for physical AI and speaks to Tesla's grand vision on Optimus," said Ives.

Ives manages Wedbush's AI Revolution ETF, which has gained 4.19% so far this year. The fund's top holdings are Micron , AMD , Broadcom and Nvidia . But he told CNBC that the core leading companies in the humanoid robotics space are still private.

"We see China as right now the clear leader on this front. The U.S. is playing in catchup mode," he said.

The market will be worth trillions of dollars over the next decade, Ives added, and "will change the way consumers and businesses operate over time."

It will create a "massive production boost," he said, "but clearly there will be risks around robots that need to be carefully balanced by the industry and governments."