24 March 2026 Global Automation Future of Tech: Physical AI -- Bridging industrial and humanoid robotics Jay Huang, Ph.D. +852 2123 2631 jay.huang@bernsteinsg.com Weibin Liang, Ph.D. +852 2123 2666 weibin.liang@bernsteinsg.com Dien Wang, Ph.D. +852 2123 2622 dien.wang@bernsteinsg.com This report is part of a series on the Future of Tech in which we identify the key technologies and companies of the future. Industrial robotics is in a renaissance (here); humanoid robotics is coming of age (here) — both drive ...

Core Viewpoint - Tesla, Inc. is positioning itself as a potential leader in the development of artificial general intelligence (AGI) and humanoid robots, with CEO Elon Musk claiming the company could be the first to achieve this goal [1][2]. Group 1: Elon Musk's Claim - Musk stated that Tesla will likely be among the first companies to create AGI, specifically in humanoid form, emphasizing the company's role as a frontrunner in the human-level AI race [2]. - AGI is defined as systems capable of performing a wide range of intellectual tasks similar to humans, rather than being limited to specific applications [2]. Group 2: Competitive Landscape - Musk's assertion places Tesla in competition with established AI labs such as OpenAI and Google DeepMind, despite its primary identity as an electric vehicle manufacturer [3]. - The company leverages its extensive real-world data from Autopilot and the capabilities of its Dojo supercomputer as key assets in the pursuit of AGI [3]. Group 3: Tesla's Edge - Musk envisions AGI not just as a digital entity but as embodied intelligence, involving robots and advanced manufacturing systems capable of manipulating materials with human-like precision [4]. - Tesla is being promoted as a platform for general-purpose humanoid robots and AI systems that can interact with the physical world, extending beyond its traditional EV and energy business [4].

Core Insights - The BMW Group is launching a pilot project in Europe to integrate 'Physical AI' with humanoid robots at its Leipzig plant, aiming to enhance car production and explore applications in battery and component manufacturing [1] - Digitalisation and artificial intelligence are central to improving production competitiveness, combining engineering expertise with AI to unlock new production possibilities [2] Production Innovations - A previous pilot project with humanoid robots at the Spartanburg plant in the U.S. provided insights that are now being utilized to further develop and scale Physical AI applications [3] - The BMW Group's production system already incorporates AI, utilizing digital twins, AI-enabled quality controls, and autonomous transport solutions across nearly all production steps [4] Data Integration - Effective AI use in production requires a unified IT and data model, which BMW has established by transforming isolated data silos into a consistent, standardized data platform, allowing for autonomous and complex task execution by digital AI agents [5] - The introduction of intelligent decision-making agents signifies a paradigm shift in production, with Physical AI comprising both digital AI agents and robots [5] Strategic Goals - The company aims to be a technology leader by early integration of new technologies into production, using pilot projects to test and develop AI-enabled robots under real-world conditions [6] - Digitalisation and AI are foundational elements of the BMW iFACTORY, ensuring future-proof, flexible, and competitive production [7] Automation Expansion - The BMW Group is strategically expanding its automation portfolio to include Physical AI and humanoid robotics, which are seen as valuable complements to existing automation, particularly in monotonous, ergonomically demanding, or safety-critical tasks [8]

Summary of J.P. Morgan's Global Markets Strategy Call (February 22, 2026) Industry Overview - **Focus on China**: The call emphasizes a shift from a 'rotation' to an 'allocation' mindset regarding investments in China, indicating a more stable outlook for the Chinese market after a prolonged downcycle [2][8]. - **Key Sectors**: The report highlights significant advancements in AI, robotics, biotechnology, semiconductors, and fintech, which are expected to drive growth in the Chinese economy [2][8]. Core Insights - **Market Recovery**: J.P. Morgan believes that the four-year downcycle in China has ended, with multiple positive drivers emerging, including AI adoption and innovation in various sectors [2][8]. - **Investment Targets**: The base case targets for MXCN/CSI 300 are set at 100/5,200, with a bullish case suggesting potential upside to 120/6,200 by the end of 2026 [2][15]. - **EPS Growth**: The broader market is expected to deliver 12-15% EPS growth over 2026-27, with valuation multiples around 12x forward P/E, which is considered attractive compared to global equities [14][15]. Key Drivers of Growth - **Innovation**: Significant progress in AI, with companies like Alibaba, Bytedance, and Xiaomi leading the charge. The focus is on embedding AI capabilities in production processes [5][39]. - **Robotics and Semiconductors**: The robotics sector is rapidly advancing, particularly in humanoid robots, while the semiconductor industry is benefiting from strong domestic players and rising localization [41][42]. - **Biotechnology**: Biotech firms are leveraging global partnerships and AI-driven discovery, showing resilience despite market volatility [46]. Consumption and Policy - **Consumer Confidence**: There are signs of recovering consumer confidence, which is crucial for sustained market gains. This recovery is linked to property price stabilization and policy support for consumption [7][71]. - **Regulatory Environment**: The call discusses ongoing regulatory pressures and anti-involution efforts aimed at curbing hyper-competition and restoring profitability across various sectors [71][79]. Potential Risks - **Investor Sentiment**: There is skepticism among investors regarding the effectiveness of anti-involution measures, particularly in competitive sectors like food delivery [71][72]. - **Domestic Policy Uncertainty**: Concerns about renewed regulatory pressures on private enterprises contribute to the China risk premium, alongside issues like housing deflation and geopolitical tensions with the U.S. [7][71]. Investment Opportunities - **Under-owned Equities**: Chinese equities remain under-owned by foreign investors, with potential inflows exceeding $300 billion as market conditions improve [7][8]. - **Preferred Sectors**: J.P. Morgan identifies leading internet platforms, materials, brokers, insurers, and thematic momentum in robotics and biotech as preferred investment spaces [15][8]. Conclusion - **Long-term Outlook**: The report suggests a significant reassessment of market prospects in China, moving towards long-term appreciation rather than short-term trading strategies [2][8].

Summary of the Conference Call on Asia Emerging Robotics Industry Overview - The conference call focused on the robotics industry in Asia, particularly highlighting the performance of humanoid robots during the 2026 Spring Festival Gala in China, which is a significant cultural event and widely viewed television show [1] Key Companies Discussed - **Unitree**: A leading player in the robotics space, known for its advancements in locomotion and reliability [2] - **MagicLab**: Another Chinese robotics company that showcased its robots during the Gala [3] - **Noetix**: Participated in the Gala, demonstrating progress in robotics [3] - **Galbot**: Featured dexterous hands from a startup founded by Hesai's founders [4] - **Hesai**: Supplier of LiDAR technology used in Unitree's robots, indicating strong collaboration and technological advancements [4] Core Insights and Arguments - **Unitree's Performance**: - Demonstrated high reliability in robot movements, crucial for the Gala's political and entertainment significance [2] - Successfully managed fleet control with over 20 robots on a dynamically changing stage, showcasing advanced perception and navigation capabilities [2] - Hardware improvements allowed robots to perform continuously without cooling intervals, indicating enhanced durability [2][4] - **Progress of Other Chinese Players**: - MagicLab and Noetix showed significant improvements compared to their previous performances, indicating rapid advancements in the Chinese robotics sector [3] - Although still behind Unitree, these companies are progressing quickly, suggesting a competitive landscape [3] - **Hesai's Technological Edge**: - The LiDARs provided by Hesai demonstrated high resistance to vibration and impact, essential for robotic applications [4] - The establishment of Sharpa, focusing on dexterous hands, reflects Hesai's ambition and diversification in robotics [4] Implications for the Western Robotics Market - Unitree's performance sets a new benchmark for robotic locomotion, potentially increasing pressure on established players like Boston Dynamics [5] - The upcoming unveiling of Tesla's Optimus Gen 3 will need to demonstrate advancements beyond locomotion to remain competitive [5] Investment Ratings - Investment ratings for companies in the robotics sector were provided, with specific ratings for Shuanghuan, Hesai, and Tuopu as Outperform, while Sanhua was rated Market-Perform and Leader Drive Underperform [27] Risks and Opportunities - **Hesai**: Risks include potential LiDAR failures leading to accidents, sanctions from the US, and loss of market share [37] - **Leader Drive**: Opportunities exist in entering the humanoid robot market and gaining market share in strain-wave reducers [38] - **Tuopu**: Risks include Tesla's performance and geopolitical issues affecting investor interest [40] - **Sanhua**: Upside risks involve Tesla's progress in robotics and energy solutions, while downside risks include market interest fluctuations [41] Conclusion - The conference highlighted significant advancements in the Asian robotics industry, particularly through the performances at the Spring Festival Gala. Companies like Unitree and Hesai are leading the charge, while other players are rapidly catching up. The implications for Western competitors and investment opportunities in this sector are noteworthy, with various risks and potential rewards identified for investors.

Core Insights - AGIBOT is expanding its presence in Singapore following its market entry in 2025, focusing on understanding local industry needs and exploring collaboration opportunities [1][2][10] Group 1: Market Engagement - AGIBOT participated in a Chinese New Year event on February 11, 2026, showcasing its robotics portfolio, including a robotic dog demonstration, to local business and professional communities [2][4] - The company engaged in a blessing ceremony at Sentosa on February 17, 2026, and showcased humanoid robotics in a hospitality environment, allowing guests to observe system design and mobility features [3][7] Group 2: Strategic Collaborations - AGIBOT featured its robotics technology at Changi Airport Terminal 5 in collaboration with Certis Group, assessing robotics integration in high-security and high-traffic environments [5] - The company is exploring diversified market approaches, including joint ventures, leasing collaborations, and establishing a regional experience center for technical demonstrations and enterprise training [9] Group 3: Deployment Strategy - AGIBOT is adopting a phased deployment strategy in Singapore, focusing on controlled testing, operational feedback, and local collaboration to ensure long-term sustainability of humanoid robotics applications [8] - The company shipped over 5,100 humanoid robots globally in 2025, ranking first in the world, reflecting its industrial-scale production capability and expanding international footprint [6]

Toyota hires seven Agility humanoid robots for Canadian factory https://t.co/Yh2BuP9Z33 ...

Group 1 - The market for AI-powered robots and autonomous machines is projected to become a trillion-dollar opportunity by 2035, significantly larger than its current size [1] - Autonomous vehicles are expected to lead the market, followed by drones and general-purpose humanoid robots, as advancements in technology drive growth [1] - The shift towards "physical AI" represents a paradigm change from digital-focused AI, creating a more diverse and deeper value chain [2] Group 2 - China currently leads in the deployment of humanoid and industrial robots, with nearly 200 public issuers identified as potential participants in the robotics theme over the next decade [2] - Automakers are emerging as significant players in the robotics market, with examples such as Mercedes-Benz utilizing Nvidia's technology for factory retooling and Tesla focusing on robotics in its operations [3] - Key technology providers include semiconductor and infrastructure companies like Taiwan Semiconductor Manufacturing Co., Samsung Electronics, and Nvidia, along with battery manufacturers such as EVE Energy and Contemporary Amperex Technology [4] Group 3 - Companies that build full robots, like Tesla, and those that shape the ecosystem, like Amazon, are identified as enablers in the robotics market [5] - Amazon operates over one million robots in its fulfillment network, indicating that the current deployment is only a fraction of the long-term potential in logistics and retail [5]

Core Viewpoint - Tesla's physical AI strategy is recognized as a multi-layered, multi-year growth driver, with analysts divided on the stock's potential, as evidenced by contrasting ratings from Tigress Financial Partners and Wells Fargo [1][2]. Group 1: Delivery Performance - In January, Tesla's deliveries showed a decline of 18% year-over-year and 59% month-over-month, indicating continued weakness in the European market and the lowest domestic deliveries in China since November 2022, alongside the highest exports since October 2022 [2]. Group 2: Long-term Growth Potential - Despite short-term demand concerns, analysts believe Tesla's transition from a pure electric vehicle manufacturer to a physical AI platform will drive long-term growth, focusing on technologies like Full Self-Driving (FSD), robotaxis, and humanoid robots [3][4]. - The strategic pivot towards a physical AI model is expected to enhance Tesla's long-term financial profile, including improved business performance, economic profit, and return on capital [5]. Group 3: Additional Business Segments - Tesla's Semi program is anticipated to begin high-volume production in 2026, and the company's energy and storage business is seen as a valuable addition to its investment case [5].

Core Insights - The inaugural Global Humanoid Robot Free Combat League (URKL) was launched on February 9, 2026, marking the first commercial free-combat competition focused on humanoid robots, initiated by Shenzhen EngineAI Robotics Technology Co., Ltd. and co-organized by Shenzhen Quanmingxing Robotics Technology Co., Ltd. [1][3] Group 1: Event Overview - The launch event was attended by representatives from the technology sector, university research teams, and media outlets, highlighting the significance of this "Technology + Sports" initiative [1][3] - The league aims to integrate competitive spectacle with technological challenges, featuring a unique "Chinese Robot Kung Fu" model [3] Group 2: League Structure and Awards - The championship team will receive a 10-kilogram pure gold belt valued at approximately RMB 10 million, representing the highest honor in the humanoid robotics field [5] - Regular matches will take place at the Longgang FRL Robot Club, with support from local authorities to establish a normalized operational mechanism [5] Group 3: Industry Impact and Goals - URKL is positioned as a comprehensive industrial platform that integrates technological collaboration, resource consolidation, talent development, and capital engagement [7] - The league aims to create a closed-loop ecosystem spanning "R&D – Manufacturing – Application – Investment," driving systematic advancements in the embodied intelligence industry [8] - ENGINEAI plans to use the league as a global collaboration hub to expand application scenarios and elevate China's robotics sector on the international stage [8]