Cathie Wood says humanoid robotics is a $24 trillion opportunity. Here’s 1 “Magnificent Seven” stock you won’t want to miss if it’s right.

In the past few years, artificial intelligence (AI) has been widely touted as the next frontier in software development, semiconductor chips, and machine learning. However, some of the more widely pursued use cases in AI tend to revolve around self-driving cars, data analytics, and cloud computing.

But what if I told you there’s a $24 trillion opportunity in AI that’s totally flying under the radar?

Below, I’ll explore a report published by tech enthusiast and CEO of Ark Invest, Cathie Wood, in which she outlines the prospects for humanoid robotics. Furthermore, I’ll detail several companies making forays into this technology and tell you which member of the “Magnificent Seven” has the best opportunity in humanoid robots.

Humanoid robots could represent a $24 trillion opportunity

You might think that humanoid robots are something out of science fiction or a Hollywood thriller. Such robots have existed primarily in fictional movies and books until now.

However, thanks to a host of entrepreneurs and ambitious technologists, real humanoid robots may not be too far off. According to Wood’s research, they have two broad applications: households and manufacturing. Both represent a $12 trillion market opportunity in her eyes. Consider this recent post by Brett Adcock, tech entrepreneur and founder of a startup called Figure AI:

ARK just released a report on humanoid robots

“If humanoid robots are able to operate at scale, they could generate about $24 trillion in revenue”

Having spoken with dozens of Fortune 500 companies, the size of this market is mind boggling pic.twitter.com/9bRMzOhFEM

— Brett Adcock (@adcock_brett) September 11, 2024

The basic idea is that artificial intelligence can be used to train robots to learn basic tasks that can help people and corporations carry out their day-to-day responsibilities. Time saved on mundane tasks like laundry and grocery shopping, or more sophisticated tasks at work can have an exponential impact on productivity. In turn, these efficiencies can lead to dramatic increases in scale and can have a significant impact on the economy.

Image source: Getty Images.

Which companies are major players in humanoid robotics?

Believe it or not, there are some cutting-edge tech companies looking to disrupt the humanoid robotics industry. In February, Figure AI raised $675 million from the likes of Nvidia, MicrosoftOpenAI, IntelJeff Bezos and (of all people) Cathie Wood.

On Figure AI’s website, the company says there are more than 10 million “insecure or unwanted jobs” in the US alone. The company estimates that manual labor accounts for nearly half of gross domestic product (GDP) globally—or nearly $42 trillion a year. . Some obvious use cases for humanoid robotics include warehouse settings, logistics, and even elder care, so it’s not out of the question for this pocket of the AI ​​arena to massively transform various aspects of work.

Another emerging player in humanoid robotics is 1X Technologies. 1X develops types of Android bots and has the financial backing of venture capital firm Tiger Global as well as OpenAI.

One Magnificent Seven member stands out from the rest

While it’s impressive to see Microsoft and Nvidia exploring humanoid robotics, I see adze (TSLA 2.90%) as a leader in the space. Outside of its electric vehicles (EVs) and battery packs, Tesla is building a humanoid robot called Optimus. The vision behind Optimus is for Tesla to integrate these robots into its car factories to work alongside humans.

The idea is that Optimus will help bring new levels of efficiency to Tesla’s manufacturing capabilities and electric vehicle production. As a result, the EV maker may be able to produce a higher volume of cars and sell them faster, compared to today’s production levels.

The outlook for Optimus is particularly lucrative given that it can complement Tesla’s existing core car business while also diversifying the entire operation as the company could commercialize its robotics business. Not long ago, Tesla CEO Elon Musk suggested that Optimus alone could ultimately be a $200 trillion opportunity.

Whether humanoid robotics is a $24 trillion market, as Wood predicts, or a $200 trillion market, as Musk suggests, investors shouldn’t get hung up on the details just yet. With Optimus going into production at Tesla factories next year and, according to Musk, the company “providing Optimus robots to outside customers” by 2026, I think investors will know sooner rather than later just how big it could be robotics for Tesla.

I don’t think investors should see Tesla as just a car company. Musk has wide-ranging ambitions in many different aspects of AI, and self-driving is just one (albeit huge) opportunity. A big part of Tesla’s investment thesis should consider the long-term impact robotics could have on the company.

Tesla is a solid investment choice for those looking for exposure to AI. Additionally, given the company’s progress in several areas that use AI — including humanoid robotics — I think Tesla is a good opportunity for investors with long-term time horizons. Now is a good time to stock up and prepare to hit the road.