Our analysts Adam Jonas and Sheng Zhong discuss the rapidly
evolving humanoid technologies and investment opportunities that
could lead to a $5 trillion market by 2050.
Read more insights from Morgan Stanley.
----- Transcript -----
Adam Jonas: Welcome to Thoughts on the Market.
I'm Adam Jonas Morgan Stanley's Global Head of Autos and Shared
Mobility.
Sheng Zhong: And I'm Sheng Zhong, Head of China
Industrials.
Adam Jonas: Today we're talking about humanoid
robots and the $5 trillion global market opportunity we see by
2050.
It's Thursday, May 15th at 9am in New York.
If you're a Gen Xer or a boomer, you probably grew up with the
idea of Rosie, the robot from the Jetsons. Rosie was a mechanical
butler who cooked, cleaned, and did the laundry while dishing out
a side of sarcasm.
Today's idea of a humanoid robot for the home is much more
evolved. We want robots that can adapt to unpredictable
environments, and not just clean up a messy kitchen but also
provide care for an elderly relative. This is really the next
frontier in the development of AI. In other words, AI must become
more human-like or humanoid, and this is happening.
So, Sheng, let's start with setting some expectations. What do
humanoid robots look like today and how close are we to seeing
one in every home?
Sheng Zhong: The humanoid is like a young child,
in my opinion, although their abilities are different. A robot is
born with a developed brain that is Large Language Model, and its
body function develops fast.
Less than three years ago, a robot barely can walk, but now they
can jump, they can run. And just in last week, Beijing had a
humanoid half marathon. While robot may lack on connecting its
brain to its body action for work execution; sometimes they fail
a lot of things. Maybe they break cups, glasses, and even they
may fall down.
So, you definitely don't want a robot at home like that, until
they are safe enough and can help on something. To achieve that a
lot of training and practice are needed on how to do things at a
high success rate. And it takes time, maybe five years, 10. But
in the long term, to have a Rosie at every family is a goal.
So, Adam, our U.S. team has argued that the global humanoid Total
Adjustable Market will reach $5 trillion USD by 2050. What is the
current size of this market and how do we get to that eye-popping
number in next 25 years?
Adam Jonas: So, the current size of the market,
because it's in development phase, is extremely low. I won't put
it a zero but call it a black zero – when you look back in time
at where we came from. The startups, or the public companies
working on this are maybe generating single digit million type
dollar revenues. In order to get to that number of $5 trillion by
2050 – that would imply roughly 1 billion humanoids in service,
by that year. And that is the amount of the replacement value of
actual units sold into that population of 1 billion humanoid
robots on our global TAM model.
The more interesting way to think about the TAM though is the
substitution of labor. There are currently, for example, 4
billion people in the global labor market at $10,000 per person.
That's $40 trillion. You know, we're talking 30 or 40 per cent of
global GDP. And so, imagining it that way, not just in terms of
the unit times price, but the value that these humanoids, can
represent is, we think, a more accurate way of thinking about the
true economic potential of this adjustable market.
Sheng Zhong: So, with all these humanoids in use
by 2050, could you paint us a picture in broad strokes of what
the economy might look like in terms of labor market and economic
growth?
Adam Jonas: We can only work through a scenario
analysis and there's certainly a lot of false precision that
could be dangerous here. But, you know, there's no limit to the
imagination to think about what happens to a world where you
actually produce your labor; what it means for dependency ratios,
retirement age, the whole concept of a GDP could change.
I don't think it's an exaggeration to contemplate these
technologies being comparable to that of electric light or the
wheel or movable type or paper. Things that just completely
transform an economy and don't just increase it by five or 10 per
cent but could increase it by five or 10 times or more. And so,
there are all sorts of moral and ethical and legal issues that
are also brought up.
The response to which; our response to which will also dictate
the end state. And then the question of national security issues
and what this means for nation states and, we've seen in our
tumultuous human history that when there are changes of
technologies – even if they seem to be innocent at first, and for
the benefit of mankind – can often be uh, used to, grow
power and to create conflict. So Sheng, how should investors
approach the humanoid theme and is it investible right now?
Sheng Zhong: Yes, it's not too early to invest
in this mega trend. Humanoid will be a huge market in the future,
like you said. And it starts now. There are multi parties in this
industry, including the leading companies from various
background: the capital, the smart people, and the government.
So, I believe the industry will evolve rapidly. And in Morgan
Stanley’s Humanoid: A Hundred Report a hundred names was
identified in three categories. They are brand developers, bodies
components suppliers, and the robot integrators. And we'd like to
stick with the leading companies in all these categories, which
have leading edge technology and good track record. But at the
meantime, I would emphasize that we should keep close eyes on the
disruptors.
Adam Jonas: So, Sheng, it seems that national
support for the humanoid and embodied AI theme in China is at
least today, far greater than in any other nation. What policy
support are you seeing and how exactly does it compare to other
regions?
Sheng Zhong: Government plays an important role
in the industry development in China, and I see that in humanoid
industry as well. So currently, the local government, they set
out the target, and they connect local resources for supply chain
corporation. And on the capital perspective, we see the
government background funds flow into the industry as well. And
even on the R&D, there are Robot Chinese Center set up by the
government and corporates together. In the past there were
successful experience in China, that new industry grow with
government support, like solar panels, electronic vehicles. And I
believe China government want to replicate this success in
humanoids. So, I won't be surprised to see in the near future
there will be national humanoid target industry standard setup or
adoption subsidies even at some time.
And in fact we see the government supports in other countries as
well. Like in South Korea there is a K Humanoid Alliance and
Korean Ministry of Trade has full support in terms of the subsidy
on robotic R&D infrastructure and verification.
So, what is U.S. doing now to keep up with China? And is the gap
closing or widening?
Adam Jonas: So, Sheng, I think that there's a
real wake up call going on here. Again, some have called it a
Sputnik moment. Of course the DeepSeek moment in terms of the
GenAI and the ability for Chinese companies to show just
extraordinary and remarkable level of ingenuity and competition
in these key fields, even if they lack the most leading-edge
compute resources like the U.S. has – has really again been quite
shocking to the rest of the world. And it certainly gotten the
attention of the administration, and lawmakers in the DOD. But
then thinking further about other incentives, both carrot and
stick to encourage onshoring of critical embodiment of AI
industries – including the manufacturing of these types of
products across not just humanoids, but electronic vertical
takeoff and landing aircraft drones, autonomous vehicles – will
become increasingly evident. These technologies are not seen as,
‘Hey, let's have a Rosie, the robot. This is fun. This is nice to
have.’ No, Sheng. This is seen as existential technology that we
have to get right.
Finally, Sheng, as far as moving humanoid technology to open
source, is this a region specific or a global trend? And what is
your outlook on this issue?
Sheng Zhong: I actually think this could be a
global trend because for technology and especially for humanoid,
the Vision Language Model is obviously if there is more adoption,
then more data can be collected, and the model will be smarter.
So maybe unlike the Windows and Android dominant global market, I
think for humanoid there could be regional level open-source
models; and China will develop its own model. For any technology
the application on the downstream is key. For humanoid as an AI
embodiment, the software value needs to be realized on hardware.
So I think it's key to have mass production of nice performance
humanoid at a competitive cost.
Adam Jonas: Listen, if I can get a humanoid
robot to take my dog, Foster out and clean up after him, I'm
gonna be pretty excited. As I am sure some of our listeners will
be as well. Sheng, thank you so much for this peak into our near
future.
Sheng Zhong: Thank you very much, Adam, and
great speaking with you,
Adam Jonas: And thanks for listening. If you
enjoy Thoughts on the Market, please leave us a review wherever
you listen and share the podcast with a friend or colleague
today.
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