$30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley

In this piece, we will take a look at the 15 best humanoid robot stocks to buy according to Morgan Stanley.

If there’s one thing that can be said for sure, it’s that 2024 is the year of technology. Artificial intelligence, despite its biggest detractors claims, has managed to persist, and in its wake, it has spurred new life into a variety of industries.

One such industry is robotics. Like artificial intelligence, robots have typically been thought to lie in the domain of science fiction. And like AI, they’re also becoming a reality faster than we can comprehend. One of the biggest advancements in robotics has been made by the private company Boston Dynamics, whose robot dogs are used by a lot of industrial customers, including SpaceX.

However, while Boston Dynamics’ robot dogs are impressive, humanoid robots, or those that look like humans and perform mechanical functions like humans are further in the domain of science fiction. These robots are popularized through movies such as. the Terminator series and iRobot, are in fact, a multi trillion dollar opportunity if we’re to believe research from Wall Street analysts.

A research report by Morgan Stanley that takes one of the most optimistic takes on humanoid robots speculates that by 2030, the humanoid population will sit at a comfortable 40,000. If this was impressive, the estimates for 2040 and 2050 are not only stunning but also orders of magnitude higher. By 2040 and 2050, the humanoid population could sit at an unbelievable 8 million and 63 million, respectively – or higher than 27 out of the 50 most populous countries in the world in 2024. In terms of monetary figures, the wage impact of the 8 million population is estimated to sit at a cool $357 billion, while the impact of the 63 million robots is $3 trillion.

This research builds on the total addressable markets for industries that are an indispensable part of the world but suffer from low labor due to low funding and wages and dangerous, repetitive, and boring tasks. A total of 21 such industries are identified, and they are divided into three tiers. The first tier, or Tier 1, is expected to see humanoid adoption as soon as 2028. In terms of the total adoption percentage, i.e. the number of roles in these industries that could be filled by humanoid robots, the top four industries are construction and extraction, production, farming, fishing, and forestry, and building and grounds clearing maintenance.

The risky industries highlighted above have an adoption potential of 70%, 68%, 67%, and 67%, respectively. The highest potential of the monetary impact is also from the Tier 1 industries, and it’s quite low if we’re to look at the ‘near term.’ For the years 2030, 2032, 2034, 2036, and 2038, the wage impacts sit at $1 billion, $6 billion, $19 billion, $60 billion, and $158 billion, respectively for the Tier 1 industries. The impact for Tier 2 industries starts in 2040, with Tier 4 beginning its contribution in 2044. Yet, while their adoption might be in the future, the riskiest of use cases, i.e. space exploration, has already seen a humanoid robot in the form of NASA’s Robonaut occupy the International Space Station (ISS) from 2011 to 2018. NASA’s Robonaut first made its way to space in 2011, and it was upgraded to Robonaut 2 in 2014 which was brought back to Earth in 2018.

One industry that MS is quite optimistic about when it comes to humanoids is social care. It believes that social care “is arguably the world’s largest TAM by the end of the century, but one that suffers from restrictive funding creating a lack of incentivisation to recruit or re-skill workers. Humanoids will face many challenges. And while they may not be the best solution, they are an increasingly necessary solution for a world facing immense longevity challenges.” Yet, the demand for these challenges could take its time to materialize. “Understanding the humanoid theme requires a multi-sector approach and a long term time horizon” cautions MS, but it wants investors to be ready to pounce on ” an extraordinary number of developments and milestones over the next 6 to 12 months” even though the “he path to commercialization at scale may take decades to fully play out.”

Talking numbers, there are a plethora of estimates floating around that wager a guess at the potential value of the humanoid robot industry. One estimate comes from no one else than the electric vehicle billionaire Elon Musk. Musk’s love of everything technology has made him who he is today, and it also means that he is often at the leading edge of leading technologies,  whether they are artificial intelligence, brain implants, or humanoid robots.

His most recent comments about humanoid robots came during his car company’s annual shareholder meeting. At the event, the executive shared that by selling these robots, his company could become worth a whopping $25 trillion at an unspecified time in the future. Musk’s robot is called Optimus, and his firm also believes that while the robot’s initial bill of materials (BOM) can range between $50,000 to $60,000, these costs can be brought down to enable his company to sell $1 trillion worth of robots a year.

Musk isn’t the only one who is convinced of the potential offered by humanoid robots. Research from more Wall Street analysts estimates that the market could be worth $38 billion by 2035. Mind you, this is the Goldman analysts’ base case model which estimates unit shipments of 1.4 million. The bear case, which sees shipments cut in half to 703 million suggests a value of $19 billion by 2035, while the bull case and the blue sky scenario estimate shipments of 6.5 million and 11.6 million units, respectively. Extrapolating from a $38 billion valuation that stems from 1.4 million units, this could mean that the very best scenario for the humanoid robot market leads to a value of $315 billion. At the heart of this optimism are AI and dropping BOM costs.

According to the analysts, the BOM for making humanoid robots has dropped by a strong 40% between 2023 and 2024 to range between $30,000 to $150,000 depending on the specifications. This reduction is primarily “driven by the availability of cheaper components with a broader scope of supply chain options from the mere existence in labs previously, optimization in design and manufacturing technique (e.g. cost for T-screw dropped significantly by shifting from electric discharge machining to mechanical machining.”

With these details in mind, let’s take a look at the best humanoid robot stocks to buy.

Our Methodology

To make our list of the best humanoid robot stocks to buy, we started with Morgan Stanley’s Humanoid 66 stock list. This list is divided into three categories, humanoid enablers and beneficiaries, enablers, and beneficiaries. Since the enablers are the ones that will directly benefit in terms of tangible revenues from potential growth in the humanoid industry, we selected the top 15 stocks in the first two categories.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).

15. Synopsys, Inc. (NASDAQ:SNPS)

Number of Hedge Fund Investors  in Q1 2024: 64

Synopsys, Inc. (NASDAQ:SNPS) is a backend semiconductor company that provides software and other tools that allow chip manufacturers to design and fine tune their products. It is part of a handful of firms of its kind in the semiconductor testing equipment industry, as part of a cluster that is limited primarily to the US and Japan. This means that Synopsys, Inc. (NASDAQ:SNPS) benefits from competitive advantage and high barriers to entry, which means that as the global demand for semiconductors grows, the firm can benefit from rising demand while it remains somewhat insulated from competitive pressures. At the same time, since the chip industry is one of the most sensitive in the world, Synopsys, Inc. (NASDAQ:SNPS) is always at risk of government restrictions that prevent it from selling products to countries such as China.

TimesSquare Capital Management mentioned Synopsys, Inc. (NASDAQ:SNPS) in its Q1 2024 investor letter. Here is what the firm said:

“We had been trimming Synopsys, Inc. as its market capitalization grew and it approached our price target. This quarter, Synopsys confirmed its plans to acquire ANSYS, Inc. Though the deal has long-term strategic benefits, in the near term we believe that will weigh on overall growth for Synopsys, add notable leverage to its balance sheet, and create more volatility for its shares. As a result, we sold our position.”

14. STMicroelectronics N.V. (NYSE:STM)

Number of Hedge Fund Investors  in Q1 2024: 16

STMicroelectronics N.V. (NYSE:STM) is one of the biggest semiconductor manufacturers in the world. It is a key part of the supply chain for cars, industrial machinery, and other products. This also places STMicroelectronics N.V. (NYSE:STM) in a key position to benefit from the semiconductor demand for humanoid robots since a variety of its products such as microcontrollers, amplifiers, and signal processors are also key in making a robot. Unlike contract chip manufacturers like TSMC, STMicroelectronics N.V. (NYSE:STM) also benefits from designing and selling its own products. This offers it a key advantage in the industrial and automotive chip industry since semiconductor design and fabrication is a capital intensive process that requires vast amounts of money and knowledge. STMicroelectronics N.V. (NYSE:STM) also sells products for consumer applications and enjoys key partnerships with sizeable companies like Apple which lend its revenue a sense of stability.

STMicroelectronics N.V. (NYSE:STM)’s management commented on the difficulties it is currently facing during the Q2 2024 earnings call. Here is what they said:

“Overall in Q2, customer order bookings did not materialize as expected. Therefore, we now anticipate a delayed recovery in Industrial and a lower-than-expected increase in Automotive revenues in the second half of the year versus the first half. We will now drive the company based on the plan for full year 2024 revenues in the range of $13.2 billion to $13.7 billion. Within this plan, we expect a gross margin of about 40%. By segment, on a year-over-year basis, Analog product, MEMS and Sensor was down 10%, mainly due to imaging. Power and Discrete products decreased 24.4% in with a decline both in Power and Discrete products. Microcontrollers revenues declined 46%, mainly due to general purpose microcontrollers. And digital ICs and RF products declined 7.6%, with a decrease in ADAS, more than offsetting an increase in RF Communications.

By end market, Industrial declined by more than 50%, Automotive by about 15% and Personal Electronics by about 6%. While communication equipment and computer peripheral increased by about 2%. Excluding the impact of the change in product mix in an engaged customer program, Personal Electronics was up about 14%. Year-over-year, sales decreased 14.9% to OEMs and 43.7% to distribution. Overall, Q2 net revenues decreased 6.7% sequentially with a decline of 4.3% in Analog products, MEMS and Sensors; 8.8% in Power and Discrete products; 15.7% in Microcontrollers; while digital Isis and RF products increased 8.6%. By end market, Industrial was down about 17% sequentially, Automotive down about 8%, and Personal Electronics down about 5%. While communication equipment and computer peripheral was up about 15%.”

13. Infineon Technologies AG (OTC:IFNNY)

Number of Hedge Fund Investors  in Q1 2024: N/A

Infineon Technologies AG (OTC:IFNNY) is another diversified European semiconductor company that caters to the needs of both the industrial and consumer industries. Like STMicro, Infineon Technologies AG (OTC:IFNNY) also operates its fabs, which provides it with the key advantages of established production and research bases from which to target the demand for humanoid robot chips. At the same time, like STMicro, Infineon Technologies AG (OTC:IFNNY) is also vulnerable to the cyclical nature of the global semiconductor industry, and it has to carefully plan its capacity expansion to ensure that factories do not sit idle and their production matches the demand in the market.

12. Cadence Design Systems, Inc. (NASDAQ:CDNS)

Number of Hedge Fund Investors  in Q1 2024: 74

Cadence Design Systems, Inc. (NASDAQ:CDNS) is another backend semiconductor manufacturing company that provides chip design services to manufacturers. This means that its hypothesis is similar to that of Synopsys, as its established position allows Cadence Design Systems, Inc. (NASDAQ:CDNS) to benefit from any growth in the demand for semiconductors – whether it is for cars, computers, or humanoid robots. Additionally, like Synopsys, since the firm is a software company and a highly differentiated one at that, it benefits from stable recurring revenue which is somewhat atypical in the highly cyclical semiconductor sector. Cadence Design Systems, Inc. (NASDAQ:CDNS)’s customer partnerships allow it to earn consistent revenue, and it also remains vulnerable to geopolitical tensions that affect the semiconductor industry.

Artisan Partners mentioned Cadence Design Systems, Inc. (NASDAQ:CDNS) in its Q2 2024 investor letter. Here is what the firm said:

“Cadence is a semiconductor design and simulation company that has lower revenue velocity than some investments in our portfolio in part because of its scale, and lower revenue variability because of its recurring revenue model. These revenue characteristics render its high-margin structure less punitive in adverse industry or economic environments.”

11. Arm Holdings plc (NASDAQ:ARM)

Number of Hedge Fund Investors  in Q1 2024: 29

Arm Holdings plc (NASDAQ:ARM) is one of the most consequential semiconductor companies in the world. This is because its chip designs form the backbone of the smartphone and low power computing industries. An intellectual property firm, Arm Holdings plc (NASDAQ:ARM) designs chip cores and then sells them to companies such as Qualcomm and Samsung. They use these designs for their processors, GPUs, and other chips. The boom in data center computing over the past couple of years that has grown the demand for power efficient processors coupled with the advances in chip manufacturing in the form of smaller feature sizes have also allowed Arm Holdings plc (NASDAQ:ARM) to expand its business from mobile to enterprise and personal computing. This unlocks additional TAM for the firm, but the threat from open source chip designs such as RISC-V could translate into a significant headwind in the future.

Arm Holdings plc (NASDAQ:ARM)’s management shared its thoughts about the impact of AI on its revenue during the Q1 2025 earnings call:

“We had our fourth straight quarter of record results with 39% year-on-year revenue, which exceeded the high-end of the guidance. That was record license revenue, up 70% year-on-year, as companies continue to invest in Arm for AI everywhere. We also had strong royalty revenue, up 17% year-on-year, as the v9 adoption increases. Now our long-term growth drivers remain consistent. Every chip being designed today requires a CPU and these are being designed with Arm in mind with our strong tie into all the world’s software. Now that has driven significant royalty revenue growth. More value per chip, v9 up to 25% now royalty revenue overall, that’s up 20% from the previous quarter.

More importantly, our smartphone royalty revenue was up 50% year-on-year. That’s against a single digit increase in units. Now, we are seeing AI everywhere, which is driving demand for Arm’s performance and power-efficient compute platform. We had recent announcements in the last quarter of Google’s Axion Processor for the cloud, AWS Graviton4 general availability. We were very excited to see the announcement of the brand-new Windows on Arm PCs that run Copilot, True AI PCs, and we also announced the Arm Ethos-U85 for Edge AI. One of the significant strategies that we’ve been investing in has been compute subsystems. With our recent launch of CSS for client, we now have active CSS engagements in the major markets of mobile, laptop, cloud and automotive.”

10. QUALCOMM Incorporated (NASDAQ:QCOM)

Number of Hedge Fund Investors  in Q1 2024: 78

QUALCOMM Incorporated (NASDAQ:QCOM) is one of the biggest semiconductor designers in the world. It designs and sells a variety of chips such as application processors, GPUs, modems, and others for smartphones and other use cases. QUALCOMM Incorporated (NASDAQ:QCOM) also enjoys a key advantage in the signals and image processing industries. These products are key for humanoid robots, and QUALCOMM Incorporated (NASDAQ:QCOM)’s decades of experience in the semiconductor design industry provide it with key advantages when compared to other firms. Additionally, it also has key licensing agreements that force companies to only use its products in regions such as the US. This adds to QUALCOMM Incorporated (NASDAQ:QCOM)’s competitive moat to ensure it can generate not only direct sales revenue but also recurring licensing revenue.

Aristotle Capital Management mentioned QUALCOMM Incorporated (NASDAQ:QCOM) in its Q2 2024 investor letter. Here is what the firm said:

“Qualcomm, a leading wireless communications technology company, was the largest contributor for the quarter. After a period of weaker global demand for smartphones (driven by a slowdown in China) and elevated channel inventory, demand from Chinese handset manufacturers accelerated 40% year‐over‐year. More importantly, in our opinion, Qualcomm continues to execute on a previously identified catalyst of shifting its business mix beyond smartphones. The company announced increased progress for its automotive and Internet of Things (IoT) solutions. Within auto, the increase in vehicle content has resulted in 35% year‐over‐year revenue growth, with a design win pipeline of ~$45 billion, keeping the company on track to achieving ~$4 billion in auto‐related revenues by 2026. In recent years, despite persistent threats of insourcing from large clients (most notably Apple), Qualcomm has been able to retain its high market share in handsets while simultaneously expanding in non‐smartphone devices. We believe this progress is a testament to Qualcomm’s history of high (and productive) R&D spending, resulting in technological superiority. We believe Qualcomm’s technologies will continue to benefit as the world stays on a path toward a proliferation of connectivity between varying devices and as AI applications extend from the cloud to on‐device.”

9. ON Semiconductor Corporation (NASDAQ:ON)

Number of Hedge Fund Investors  in Q1 2024: 45

ON Semiconductor Corporation (NASDAQ:ON) is another large semiconductor manufacturer. Headquartered in Arizona, it makes a variety of key products that can be used in humanoids. These include sensors, power management products, signal amplification products, and more. ON Semiconductor Corporation (NASDAQ:ON) targets the automotive and industrial machinery industries with its products, which provides it with a stable source of product demand that is dependent on the economic cycle. However, ON Semiconductor Corporation (NASDAQ:ON)’s dependence on EVs can also prove to be problematic due to downward cost pressures in the industry stemming from higher supply as more EV companies enter the market. Additionally, since it does not operate on the leading edge of the semiconductor industry, ON Semiconductor Corporation (NASDAQ:ON) has limited potential to benefit from the multi billion dollar CHIPS and Science Act.

ON Semiconductor Corporation (NASDAQ:ON) commented on the current market pressures that it’s facing during the Q2 2024 earnings call:

“As we indicated in our Q1 call, we are seeing some stabilization in demand in our core markets. Inventory digestion persists with some pockets improving as customers maintain a cautious stance in 2024. We don’t see a change to the L-shaped curve I talked about in Q1, but we expect parts of industrial, such as Energy Infrastructure to recover in the second half. Among the regions, Asia-Pacific, namely China is recovering, driven by both automotive and industrial.

During this time of market uncertainty, we have not taken our foot off the pedal and remain focused on what we can control our execution. We have doubled down on our investments to build out our strategic portfolio of Analog and Mixed-Signal and Power Solutions. We have been gaining share by securing significant design wins in power, and we have continued to improve our cost structure through ongoing structural changes. All these efforts position us very well in a recovery with top-line growth and gross margin expansion. Our advantage remains in our comprehensive and innovative product portfolio to capture market opportunities. onsemi’s intelligent power and sensing solutions have become synonymous with high efficiency and performance, which are critical to solving customer problems and the high-growth megatrends in automotive, industrial, and AI data centers.”

8. NXP Semiconductors N.V. (NASDAQ:NXPI)

Number of Hedge Fund Investors  in Q1 2024: 40

NXP Semiconductors N.V. (NASDAQ:NXPI) is a Dutch semiconductor company that makes a variety of chips that can be used in humanoid robots. These include communications and applications processors, environmental and gyroscopic sensors, and controllers. It is one of the biggest companies of its kind in the world, which allows NXP Semiconductors N.V. (NASDAQ:NXPI) to have a diversified customer base which lets it hedge against a downturn in one industry. Yet, its presence in automotive, industrial, IOT, and communications doesn’t completely insulate NXP Semiconductors N.V. (NASDAQ:NXPI) from sector specific headwinds. This is because automotive is its biggest business division, and any slowdown tends to affect the stock price. At the same time, since NXP Semiconductors N.V. (NASDAQ:NXPI) is one of the few chip makers in the world, its experience and economic scale can allow it to affective reorient towards humanoids should the need arise.

NXP Semiconductors N.V. (NASDAQ:NXPI)’s management shared key details for its inventory management during the Q2 2024 earnings call:

“With that, our quarter 3 guidance assumes approximately 1.8 months of distribution channel inventory. However, we will not grow channel inventory back to anywhere near our long-term target of 2.5 months within this calendar year. As a result, we will continue to stage inventory in a very controlled and targeted manner in the channel. Taken together, the second half will grow over the first half with the potential outcome for 2024 to be a modest annual revenue decline in the low single digit range. This is toward the low end of our earlier expectations because of the more persistent and deep inventory digestion at our auto Tier 1 customers and due to the continued weakness in our core industrial markets in Europe and the Americas. Before turning the call over to Bill, I would like to highlight what I believe is a truly strategic long-term investment for our hybrid manufacturing strategy.”

7. NVIDIA Corporation (NASDAQ:NVDA)

Number of Hedge Fund Investors  in Q1 2024: 186

NVIDIA Corporation (NASDAQ:NVDA) makes and sells GPUs that are used to compute artificial intelligence workloads. These include machine learning, a key arm of AI that is used in vision processing. Vision processing is the bedrock of humanoid robots since it allows them to perceive their environment and act accordingly. NVIDIA Corporation (NASDAQ:NVDA) enjoys a considerable competitive moat since its products are the industry leaders in terms of performance. It also benefits from tight software integration through its CUDA software which allows users to control GPU functions – which can be customized for humanoids. NVIDIA Corporation (NASDAQ:NVDA) also offers microservices and orchestration services for humanoid robots, with CEO Jensen Huang already having claimed that the “next wave of AI is robotics.”

Aristotle Atlantic Partners mentioned NVIDIA Corporation (NASDAQ:NVDA) in its Q2 2024 investor letter. Here is what the firm said:

“Nvidia contributed to portfolio performance in the second quarter as investors continued to view positively the new product roadmap for the rest of the year. The company sees accelerating demand for its GPU semiconductors from hyperscalers and enterprises. Nvidia’s GPU semiconductors continue to be the industry-leading building blocks of the accelerated computing data center architecture to drive AI compute and applications.”

6. Ambarella, Inc. (NASDAQ:AMBA)

Number of Hedge Fund Investors  in Q1 2024: 30

Ambarella, Inc. (NASDAQ:AMBA) is a hardware company that sells image processing and sensing products along with chips that can compute artificial intelligence workloads. This makes it a key stock for humanoids, as sensory processing is a key requirement for these products. A high growth stock, Ambarella, Inc. (NASDAQ:AMBA)’s products are used in other devices such as video sensing products. This means that the stock, and the firm, tend to thrive during a high growth environment that is not constrained by either high inflation or high interest rates. Consequently, Ambarella, Inc. (NASDAQ:AMBA)’s shares are down 27% year to date since the firm has held to deal with the non AI GPU related inventory correction in the semiconductor industry. Ambarella, Inc. (NASDAQ:AMBA) sells 5nm processors, which are the second most advanced in the world. This offers its products performance and power efficiency advantages, and it could ride any potential wave in video surveillance, video processing, and tangential industries.

Ambarella, Inc. (NASDAQ:AMBA)’s products are also able to target the growing assisted driving industry. The firm’s management shared insights for this business during its Q1 2025 earnings call:

“Zooming out for a minute, the significant capacity being added to the AI training network infrastructure globally both help for the ultimate deployment of AI inference at edge where we participate in the market. The deployment of AI inference at edge enables end-users to more practically take advantage of so many different AI breakthroughs. As focused on AI and the edge of networks increase, we see AI inferencing proliferating in multiple areas, and we believe we are well positioned to take advantage of this. In fact, we are already in the early stage of demonstrating how it may play out for us. In Q1, for example, our customer engagement includes our first passenger vehicle wins for our 5-nanometer CV3-AD family of AI central domain controllers.

We added another CV3-AD win in the commercial vehicle market, secured multiple enterprise class AI inferencing wins, and even in other IoT cameras, we are reporting additional wins for our 5nm CV5 AI process. In the midst of this great change, our opportunity and the challenge are to develop AI technology and products that not only are extremely efficient for edge deployment, but also flexible enough to execute a very wide range of AI workload across all disparate applications. We are already in mass production with our AI products for video-intensive CNN networks, such as detection, classification, fusion, planning, stitching, mapping, tracking, framing, auto-editing, and neural network image signal processing. Now our third generation of AI technology integrated into our CV3-AD and CV7 series of SoC can support transformer networks for a variety of generative AI applications.”

5. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)

Number of Hedge Fund Investors  in Q1 2024: 135

Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is the largest contract chip manufacturer in the world. The chip manufacturing industry is one of the most capital intensive in the world, with firms like Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) investing billions of dollars each year to expand their production facilities and keep up with the pace. This means that the firm will likely maintain its dominant position in the industry for years to come except for any black swan events. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)’s leading edge nodes, such as its N3 and N2 nodes are at the front of the industry in terms of technology. It means that the firm will be the go to company of choice for any company that designs chips for humanoid robots. However, Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)’s location in Taiwan remains its biggest risk as any conflict between Taiwan and China can lead to production disruptions.

ClearBridge Investments mentioned Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) in its Q2 2024 investor letter. Here is what the firm said:

“However, we added to our semiconductor positioning during the quarter with the purchase of Taiwan Semiconductor (TSM). TSM, an out-of-benchmark name, is the world’s fabrication production provider of choice. The criticality and sophistication of the company’s manufacturing footprint powers all of the leading edge fabless global semiconductor companies, including Apple, Nvidia, Qualcomm, AMD and Broadcom. While AI has driven upside in data centers, PCs and handsets are at cycle lows, positioning half of the company’s business for a recovery.”

4. Mobileye Global Inc. (NASDAQ:MBLY)

Number of Hedge Fund Investors  in Q1 2024: 34

Mobileye Global Inc. (NASDAQ:MBLY) is an assisted driving platforms company that enables vehicles to sense their environment. An Intel subsidiary, the firm’s products can also be used in the humanoid robotics industry since these devices also have to sense their environment to make decisions and navigate through objects, obstacles, and people. It also enjoys a key competitive advantage in its industry through its SuperVision platform, which allows assisted driving at a whopping 130 kilometers per hour on several different road types and features like evasive maneuvers, autonomous lane changing, and blind spot detection. Like its peers though, Mobileye Global Inc. (NASDAQ:MBLY)’s stock is also vulnerable to economic downtrends, and since it focuses exclusively on assisted driving technologies, any regulatory tightening of this industry could lead to headwinds. Similarly, if assisted driving takes off, then Mobileye Global Inc. (NASDAQ:MBLY) could also ride the wave.

Mobileye Global Inc. (NASDAQ:MBLY)’s management is cognizant of these factors as it shared during the Q2 2024 earnings call:

“Ultimately, Mobileye’s long-term growth outlook hinges on our prospects to lead the path of next generation ADAS and solve autonomy while offering a spectrum of product variants appealing to the broadest audience of car makers possible. As a final topic, I’ll highlight some important details of how the EyeQ6 platform represents a leap forward towards these goals and helps position us as the only company in the world that can support all four consumer vehicles categories and Robotaxis as well. As the global OEMs are emerging from a major replanning process, combustion engines versus EV, China versus non-China, buy versus build for autonomy, we are seeing increased clarity on future ADAS and AV segmentation around four distinct categories. Number one, emerging market ADAS as the future growth driver for the 25 million or so vehicles sold today that don’t have any ADAS.

These systems will require lower price for less functionality, yet with high performance, which is where we excel. Number two, developed market ADAS. Recent guidance on future regulations continue to push the envelope on performance, which is a significant positive for us. It’s a key factor in the success of EyeQ6 Lite, which has already been nominated for 50 million units of future business, is involved in many current RFQs and is in — and is progressing towards design wins across all major customers.”

3. XPeng Inc. (NYSE:XPEV)

Number of Hedge Fund Investors  in Q1 2024: 16

XPeng Inc. (NYSE:XPEV) is a Chinese electric vehicle company. It competes directly in the humanoid robot industry by having produced a prototype robot called the PX5 robot. Unlike Western firms which have to be quite careful with cost control, XPeng Inc. (NYSE:XPEV) benefits from its Chinese roots which can allow it to leverage a low cost industrial manufacturing base and cheap labor to reduce the humanoid bill of materials. This reduction, as outlined in our intro, is key for the industry, and XPeng Inc. (NYSE:XPEV) further benefits from the sizeable Chinese manufacturing industry to generate demand for its products. However, trade tensions between the West and China could leave XPeng Inc. (NYSE:XPEV) restricted to China, and make it miss out on the substantial revenue and demand from Western firms as they seek to fill out labor shortages with robots.

2. Toyota Motor Corporation (NYSE:TM)

Number of Hedge Fund Investors  in Q1 2024: 17

Toyota Motor Corporation (NYSE:TM) is the globally renowned Japanese automotive giant. It is also one of the oldest players in the humanoid robots race and launched the first such product in 2017. Since then, Toyota Motor Corporation (NYSE:TM) has kept up the pace with its humanoid robot development, and one of its latest products is the Punyo humanoid research platform. Punyo is designed to carry objects with the help of its complete upper body, which provides it with added capacity when compared to just the arms. The robot is also trained using AI technologies, which provides Toyota Motor Corporation (NYSE:TM) with an added leg up in the early stage of the industry. Its years long focus on humanoid research provides the firm with a key competitive moat, and Toyota Motor Corporation (NYSE:TM) has the added advantage of being a manufacturing company with exposure to the sizeable Asian manufacturing industry – key variable that could help it sell humanoid robots at scale if the industry picks up.

1. Tesla, Inc. (NASDAQ:TSLA)

Number of Hedge Fund Investors  in Q1 2024: 74

Tesla, Inc. (NASDAQ:TSLA) is primarily an EV company as it earns most of its revenue from this industry. However, the key to its success in the EV industry is Tesla, Inc. (NASDAQ:TSLA)’s ability to establish a brand new manufacturing ecosystem to make a new product kind is also at the heart of its humanoid robot plans. Tesla, Inc. (NASDAQ:TSLA)’s humanoid robot is called Optimus, and its CEO Elon Musk hopes to bring down its costs significantly to sell the product at scale to generate up to $1 trillion in annual revenue at some point in the future. The firm’s manufacturing experience provides it with key advantages to setting up a robot making supply chain and equipment, which, when coupled with Tesla, Inc. (NASDAQ:TSLA)’s assisted driving platform’s reliance on machine learning and visual sensing, can help it in launching a new product. At the same time, should investors perceive that Tesla, Inc. (NASDAQ:TSLA) is distracted and shifting from its bread and butter EVs, then the stock can suffer.

Tesla, Inc. (NASDAQ:TSLA)’s Elon Musk’s optimism for Optimus was evident during its Q2 2024 earnings call. Here is what he said:

“Yes, I mean, as I’ve said a few times, I think the long-term value of Optimus will exceed that of everything else that Tesla combined. So, it’s simply — just simply consider the usefulness utility of a humanoid robot that can do pretty much anything you ask of it. I think everyone on earth is going to want one. There’s 8 billion people on earth, so it’s 8 billion right there. Then you’ve got, all of the industrial uses, which is probably at least as much, if not way more. So I suspect that the long-term demand for general purpose humanoid robots is in excess of 20 billion units. And Tesla is — that has the most advanced humanoid robot in the world, and is also very good at manufacturing, which these other companies are not.

And we’ve got a lot of experience — with the most experienced with the world leaders in real world AI. So we have all of the ingredients. I think we are unique in having all of the ingredients necessary for large scale, high utility, generalized humanoid robots. That’s why my rough estimate long-term is in accordance with the ARK [ph] Invest analysis of market cap on the order of $5 trillion for — maybe more for autonomous transport, and it’s several times that number for general purpose humanoid robots. I mean, at that point, I’m not sure what money even means, but in the benign AI scenario, we are headed for an age of abundance where there is no shortage of goods and services. Anyone can have pretty much anything they want. It’s a wild — very wild future we’re heading for.”

Is it really a surprise that TSLA leads our list of humanoid robot stocks? But our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than TSLA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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