Robots that work like humans are on the rise, and investors looking to bet on the trend have lots of options to play the growing technology over the next decade, according to Goldman Sachs . The firm estimates that in 10 to 15 years, it’s achievable for the humanoid robots market to reach $6 billion and continue to grow from there. In addition, this industry could fill important parts of the job market – it could represent 4% of the U.S. manufacturing labor shortage gap by 2030 and 2% of lack of global elderly care workers by 2035. “Should the hurdles of product design, use case, technology, affordability and wide public acceptance be completely overcome, we envision a market of up to US$154bn by 2035E in a blue-sky scenario (close to that of the global EV market and one-third the global smartphone market as of 2021), which suggests labor shortage issues such as for manufacturing and elderly care can be solved to a large extent,” wrote Jacqueline Du in a Nov. 2 note. Robots not new to work Humanoid robot technologies are not new – many low-skilled, repetitive tasks have been replaced by robots – but a continuation of existing applications including industrial robots and autonomous vehicles with more complex integration, according to Du. Forecasting growth in the sector shows that humanoid robots could become a widely adopted terminal device, following only smartphones and electric vehicles, according to Goldman Sachs. At its most recent investor day, Tesla demonstrated its Optimus humanoid robot, and has said it has a goal of shipping millions of the units in the next five to ten years. It also wants to make the robots less expensive than a car. That gives some clues as to the future of humanoid robots, which would likely find their first applications in factories and could be especially valuable if they’re able to work up to eight hours a day – previous models have only been able to work one or two hours continuously. Of course, before such machines take over work currently done by humans, there will have to be advances in technology and costs will have to come down to “be competitive with a minimum wage worker’s two-year salary,” according to the note. This could still be soon on the horizon. “Assuming the technology level will be attained and referencing cost reductions in EV manufacturing historically, our assessment suggests factory applications could be economically viable in 2025E-28E and consumer applications in 2030E-2035E,” said Du, adding that the imminent need of filing labor shortage gaps could outweigh this payback consideration from customers. Where investment opportunities lie The firm put together a list of stocks in its coverage universe that could benefit from the trend towards adoption of humanoid robots across a few different areas. Goldman’s coverage includes companies from China, Japan, Europe and the U.S. and is not limited to buy-rated stocks. Currently, Goldman Sachs sees the most visible investment opportunity at this stage in motion components, according to the note. This is because there is a more mature supply chain from existing industrial robot and automation applications. There’s a long runway of potential growth as well. “In a blue-sky scenario we see a range of 21%-463% in incremental revenue by 2030E vs 2021 actual revenue from existing business for key stocks (Leaderdrive/HDS/Hiwin/THK/Sanhua), while in the base case we see 2%-35%,” wrote Du. The firm doesn’t recommend any U.S.-listed names in this category. Sensing modules could also benefit and leverage technology from existing advanced driver assistance system supply chains in place. Investors can look to buy stocks such as Aptiv PLC and Magna International to capture this growth, the firm said. “Four primary types of sensors used in ADAS include camera, radar, ultrasonic and lidar. Each sensor has its own advantages and limitations, which is why both humanoid robots and ADAS will employ a combination of them, known as the sensor suite,” said Du. There’s even more opportunity in the crossover between sensors used in electric and autonomous vehicles and what could be used in humanoid robots. “What’s unique in humanoid robots’ sensing module is gyroscope/ Inertia Measurement Unit (IMU), to keep the robot’s balance,” said Du. Low-end IMUs are usually found in vehicles, while high-end ones can sense movement in three dimensional spaces and are used in aerospace. This could include companies such as Raytheon Technologies and Honeywell . Software versus hardware Of course, some of the opportunities that Goldman Sachs sees will take some time to play out. And, it isn’t immediately clear if winners in the space will be on the hardware side making robots or the software side, developing the computer systems that run them. “We think it is still unclear in the future whether hardware or software will become the more important aspect of humanoid robots,” said Du, adding that cost constraints will force players to find the right balance between the two. “Previous start-ups failed to access the mass market because they couldn’t reduce the cost,” she said. “Future attempts at humanoid robots will need to decide whether they can reduce the usage of hardware components and let software take on the analytical role.”
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