Robots Are Driving the Next Industrial Revolution
In Tesla's (TSLA) earnings call last week, Elon Musk predicted that the company's humanoid robot, Optimus, would be not only its biggest product... but "probably the biggest product ever."
I'm skeptical... of Musk's claim. I'm not at all skeptical about the robots.
The robotics boom is happening. It's not a secret. It's not a "skunkworks" project.
The AI mania has unlocked countless new possibilities for what tasks a robot can learn and perform. And hundreds, if not thousands, of companies are racing at full speed to put humanoid robots on our streets and in our homes.
You see a new story or video almost every day. Robots delivering packages... Robots playing tennis... Robots dancing in unison.
The trouble for Musk is competition. Telsa was an early mover in electric vehicles ("EVs")... essentially making the first "cool" EVs that weren't little eco-boxes for tree huggers.
But Optimus will have huge competition from a gigantic ecosystem of robot designers, manufacturers, suppliers, and more.
Now, Musk has said that robots may outshine the entire auto industry. And he's right.
Decades ago, auto manufacturing represented American industry. Auto magnates like Henry Ford were the pinnacle of business success. They employed thousands. And everyone had their favorite bright, shiny make and model.
We're only a few steps past the "Henry Ford stage" in robot adoption. But it's clear we're at the beginning of the next industrial revolution.
For investors, there are a lot of ways to play the robotics boom outside of Tesla's stock. And you should be digging in... because the upside potential is huge.
This week, I got the chance to sit down with Brendan Ahern, chief investment officer of asset manager KraneShares.
Rather than bet on a single robotics name like Tesla, KraneShares runs a robot-themed exchange-traded fund ("ETF") that serves as a great barometer for the industry. That's the Global Humanoid and Embodied Intelligence Index Fund, though it's usually referred to by its ticker symbol, KOID.
As you can see, KOID has gone on a wild ride since it launched in June 2025. So far, it's up more than 50%...
Today, though, we won't focus on KOID specifically.
Instead, I want to share part of my discussion with Ahern. As you'll see, he and KraneShares have dug deep into the future of robotics and the companies leading the charge.
Here's what he says is happening right now...
Three Things to Know About the Robotics Revolution
AI Turns a Toy Into a Tool
We've had industrial robots for decades. They work in factories and can do basic things like weld joints, assemble components, and move an object from here to there.
But what robots can now do with the help of AI is different...
AI has given robots the ability to perceive their surroundings and make decisions on their own – not just follow a carefully coded script.
Ahern travels the world studying robots. And what he has seen in Asia shows how things have changed.
At Tokyo's airports, for instance, driverless wheelchairs carry passengers to their gates. In restaurants across China and Hong Kong, little R2-D2-like bots shuttle plates back and forth from the kitchen to the dining room.
These aren't prototypes. They're real robots... deployed and working.
Humanoid robots are even more consequential. They signify a shift from robots existing in controlled environments... to robots operating in the real world of human labor.
Just this week, Japan Airlines announced that it'll start using Chinese robotics company Unitree's G1 humanoid robots as luggage handlers.
Ahern describes these robots like "a ChatGPT thinking but within a human body."
As he explains it, we built the world for human-sized people. Chairs, desks, assembly lines, hospital hallways – all are designed for human dimensions.
That's the whole point of making a robot in a humanoid form. The robot is built to accommodate the physical nature of our environment.
Ahern predicts that within 10 years, we'll see humanoid robots out working in hotels, hospitals, airports... and even inside people's homes.
This Could Be the Third Industrial Revolution
Last year, roughly 20,000 humanoid robots were manufactured globally.
That's a tiny number. But the growth projections from major Wall Street firms are staggering.
Right now, analysts are using the adoption-rate curves we saw with hybrids and EVs. Bank of America researchers estimate there will be 10 million humanoid robots manufactured globally by 2035.
A Morgan Stanley analyst – who actually left auto coverage to become a dedicated humanoid-robotics analyst – projects there will be 137 million by 2040.
He calls it the Third Industrial Revolution.
Meanwhile, the cost curve will do what cost curves do...
Unitree, considered the global leader in humanoid robotics, already makes 300 G1 humanoid robots per day. Each unit costs around $13,500 – so it's not cheap. Overall, Unitree made about 5,500 G1 robots last year, and its revenue grew 355%.
Of course, as production scales, the price per unit will drop. The same logic that let Henry Ford's assembly line make cars affordable to the masses applies here.
You Can't Build These Robots Without Both the U.S. and China
The U.S.-China rivalry is real. But when it comes to humanoid robotics, Ahern believes the two countries aren't competitors so much as codependents.
China dominates the manufacturing. The actuators, the batteries, the ball bearings, the rare earth minerals – all of it is made in or near China's industrial hubs.
That ecosystem took decades to build and is nearly impossible to replicate anywhere else.
The U.S., on the other hand, dominates the ideas. Nvidia's (NVDA) chips power the "brains" of these robots. American AI software – the models, the training, the programming – is what makes the hardware come alive. The Unitree G1 is built in China, but its brain runs on American tech.
For investors, that means this isn't a simple bet on one company or one country. Rather, it's a global ecosystem play.
The winners will be spread across the entire supply chain... from the manufacturers and parts makers to the chip designers, rare earth miners, and AI companies... and they'll be spread around the globe.
Watch to Learn More
To hear more about my discussion with Brendan Ahern, check out today's Top Stocks video. We talk about what's next for robots, the companies building them, and even bring a Unitree GI robot into the studio to see how it works.
You can watch the entire episode on our YouTube page by clicking the image above. Be sure to like and subscribe to get more of our videos.
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Straight to the Source
- KraneShares Global Humanoid Robotics and Embodied Intelligence Index Fund holdings
- Bank of America's recent report forecasting robot adoption
- Specs on the Unitree G1 robot
Until next week,
Matt Weinschenk
Publisher and Director of Research
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