How AI Is Powering the Rise of Humanoid Robots in the Workforce

Artificial intelligence (AI) might grab all the headlines and drive stock market returns, but another technology seems to be approaching its breakout moment.

We think humanoids — robots with two arms, two legs and an AI brain — could become more common in many industries. And it might happen sooner than you expect.
Goldman Sachs estimates the addressable humanoid market will reach $38 billion by 2035.¹ Under this forecast, shipments of new robots would skyrocket from a few thousand each year to 1.4 million annually. Tesla has set a goal of producing 1 million of its Optimus humanoids per year within five years.²

Humanoids could help ease labor shortages, lower operating costs and boost productivity across multiple sectors, potentially having transformative impacts on businesses and investors.

If you think this sounds far-fetched, remember that robots technically joined the workforce decades ago. In 1961, General Motors installed Unimate, the first industrial robot, at an assembly plant in New Jersey.

According to one industry group, more than 4 million industrial robots already weld, paint and perform other tasks in factories worldwide.³ And that’s not counting the robots working in logistics. Amazon employs more than 1 million robots in its warehouses.⁴

Most of these robots aren’t humanoids and lack their capabilities. However, as technology progresses, widespread adoption of humanoids is getting closer to reality.

This shift might not happen overnight, and significant hurdles could slow or even stop its progress. But we think it’s just a matter of time before humanoids reach critical mass, benefiting robotics companies and businesses using these machines.

What Are the Benefits of Humanoid Robots?

Humanoid robots are designed to do more with fewer constraints than many industrial robots currently in use.

Many industrial robots are essentially disembodied arms dedicated to specific tasks, like picking up and sorting items. They remain stationary in one location. Others resemble amped-up Roomba^® vacuum cleaners, but instead of cleaning floors, they carry hundreds of pounds of inventory throughout a warehouse.

These machines perform tough, boring jobs efficiently. But they’re not very versatile.

Compare them to Digit, a humanoid from Agility Robotics. This model can load and unload pallets, organize empty storage totes and carry containers to a conveyor belt.

Digit can also adapt to changes. If the conveyor belt stops or backs up, the robot will stack containers next to it. Once regular activity resumes, Digit starts lifting these containers onto the conveyor again.

Being “human-shaped” is another advantage for humanoids. After all, AI-powered robots, such as those from Waymo and Skydio, exist today as autonomous cars and drones.

However, because humanoids are about the same size as humans and move like we do, they can operate more easily in buildings designed for people. As noted in Figure 1, no expensive retrofits are required.

What’s Driving the Rise of Humanoid Robots?

Technology is advancing to the point where robotics companies can build humanoids capable of performing a wider range of tasks. The tech is improving in three specific areas:

1. Artificial Intelligence

Humanoids are essentially “embodied AI,” a way for artificial intelligence to operate in the physical world. AI acts as a robotic brain, allowing humanoids to navigate a crowded factory, learn new tasks and respond to verbal commands.

Figure, another robotics company, has released a video featuring two humanoids working together to put away groceries. They place each item correctly, with ketchup in the fridge and cookies in the drawer.

While these sound like simple tasks — and they are, for humans — they’re complex jobs from a computing standpoint. Until AI evolves, humanoids might do best in relatively limited and structured jobs.

2. Actuators and Sensors

Humanoids now have better “eyes and hands” thanks to developments in sensors and actuators.

Actuators generate the physical force to move a robot’s limbs or hands. Newer generations possess a wider range of motion and can make more precise movements.

Sensors capture a massive amount of data as a humanoid engages with its environment. Video, LIDAR, accelerometers and pressure sensors collect information about the robot’s speed, position and grip strength, as well as the objects around it. Without these inputs, humanoids can’t function smoothly in the physical world.

Actuators and sensors have room for improvement, especially in precision. Companies are also working on developing strong and lightweight materials for everyday use.

3. Batteries

Rechargeable battery life is also improving, which could allow humanoids to move around more freely and work longer.

Figure recently unveiled its third-generation battery, which can run for five hours at peak performance. This new model marks a 94% improvement in energy density since the development of the first version.⁵ It also costs 78% less than the second generation.

Even so, five hours isn’t a full shift. Batteries are getting better, but industrial users may demand more.

What’s Fueling Interest in Humanoid Robotics?

Aging Populations: The world population is still growing, but not evenly. According to the United Nations, dozens of countries, including China, Germany, Russia and Japan, have already peaked.

Smaller populations often experience problems like labor shortages, reduced productivity and decreased consumer demand. Deploying humanoids to address these challenges could seem compelling to businesses and policymakers.⁶

Declining Globalization: More companies might reshore their production if higher U.S. tariffs and protectionism become permanent.

Right now, a labor shortage is hindering these efforts. However, the mass availability of affordable humanoids could change the calculation for companies considering a move.

What Potential Obstacles Do Humanoids Face?

1. Production Limitations and Cost Considerations

Robotics companies aren’t producing humanoids at scale.

Figure recently launched its BotQ production facility, which could produce 12,000 robots in 2025.⁷ The company still wants to raise its output “substantially.”

Part of the problem is the supply chain, or the absence of one. Figure said it had to design “almost the entire robot from scratch” because there isn’t a mature supply chain.

According to Morgan Stanley Research, building a humanoid can cost up to $300,000 on the high end, though some firms are quoting lower prices.⁸ Unitree, a Chinese robotics company, says its Unitree G1 humanoid starts at $16,000.⁹

If companies can’t mass-produce humanoids, achieving the necessary economies of scale will be harder. This could keep prices higher, further limiting adoption.

Supply chains may eventually grow to meet this need. Given their expertise, we see China and Japan having an advantage in this area.

2. Social and Political Opposition

Humanoid robots are designed to take over jobs that humans do now. That may lead to resistance from consumers, voters and elected leaders, even if the robotics industry ultimately creates more jobs than it destroys.

For example, governments could enact regulations to control or limit humanoid use. These efforts might look like the European Union’s Artificial Intelligence Act.¹⁰ Last year, the act established rules on AI in hiring, credit scoring, insurance and other areas.

Labor unions have also voiced concern about more automation.

The Las Vegas Culinary Union, whose members staff the city’s hotels and casinos, has negotiated protection against tech-related job loss.¹¹ These include severance for technology-related job cuts and advance warning when an employer adopts tech that could affect jobs.

More opposition may spring up. Historically, though, societies usually embrace innovations that are net positives, even if they have drawbacks.

What’s Next for Humanoid Robotics?

A few mega-cap companies currently dominate the field of artificial intelligence; however, this hasn’t yet occurred in the realm of humanoid robots. Our team is actively monitoring the industry to identify which companies will emerge as leaders.

We believe conditions may favor mid-cap firms in the short term, particularly within the industrial sector. Midsize companies specialize in the components humanoid robots require, such as analog semiconductors, motors and power systems.

Companies will also need large and specialized supply chains to manufacture humanoids at scale, potentially creating opportunities for mid-cap firms.

Establishing these systems may take years, and perfecting them could take decades. However, we believe the long-term trend calls for more humanoids, possibly sooner than many expect.