It is reconstitution time. That means it’s time to take a closer look at the ongoing trends across the industries covered by the ROBO Global suite of indices (robotics, AI, and healthcare). As part of this process, last week I sat down with Professor Illah Nourbakhsh, director of CREATE Lab at the Robotics Institute at Carnegie Mellon University, and one of the strategic advisors to the ROBO Global Robotics and Automation Index (ROBO).
When it was time to talk about AI, we agreed that the future of the economy has never been more unpredictable. Anthropic today seems to always be one plug-in away from upending entire business models. What SaaS will look like in the future is uncertain. In short, the digital landscape is evolving faster than most can adapt.
During our chat, one conclusion kept cropping up. No matter who comes first in the AI race, or what the digital field looks like in 10 years, one thing appears inevitable: Robotics will be one of the big winners. After all, the robot does not care who made the actuator that lets it move, what company developed the edge AI that allows it to understand its environment in real time, or the systems that coordinate its fleet. Neither will that matter to us participants in the economy. The key takeaway: Right now, all evidence points to AI being the key to robots playing a role reshaping the future of the economy… whatever that new shape may be.
The Leap Into Physical AI
For the last few years, the spotlight has been dominated by generative AI models producing text, code, and images. However, we are now crossing the threshold into physical AI, where this intelligence is embodied in the real world. At CES this January, the overarching theme was AI’s definitive transition from conceptual demos to mass commercial deployment across supply chains and factories. Just recently, we’ve seen major leaps like Nvidia’s (NVDA) release of its Cosmos world foundation model, which provides the physical intelligence and simulation environment to accelerate learning for already influential robotic models like GR00T.
The key benefit of applying AI to the physical world is that it unlocks a vast amount of previously unused assets, like fleets of idle vehicles or inactive machinery. Physical AI will optimize these resources, putting them to work.
Edge Computing: The New Brain of the Operation
One of the key shifts going forward is how AI operates in robotics. While we will still need massive data centers, our heavy reliance on them won’t last forever. Instead, as far as robotics is concerned, the future belongs to edge computing, processing data locally, right inside the robot.
By putting the AI directly on board, machines can make split-second, intelligent decisions without waiting for data to travel to a distant server. This enables them to function in environments like remote farms, deep mines, or fast-paced warehouse floors. Since robots already require onboard compute, power management, and controller hardware just to operate, running intelligence locally is less about adding new components and more about unlocking the full potential of what’s already on board.
Running AI locally relies heavily on advanced computing architecture provided by ROBO index constituents like QUALCOMM (QCOM). But it’s not just about the processing chip; getting the most out of every watt is just as important. Companies like Infineon Technologies (IFX) are driving critical gains in power efficiency through advanced semiconductor materials, which makes a massive difference when scaling automation.
Shared Autonomy and Responsive Infrastructure
The future of automation relies on shared autonomy, where humans and robots work side-by-side, sharing intentions in real time. As robots move out of isolated cages and into shared, dynamic environments, they need to safely interact with unpredictable surroundings. In a recent webcast, Professor Nourbakhsh compared this future to couples figure skating: systems that constantly read and react to the minute physical changes and shared intentions of those that surround them.
To achieve this interaction, legacy rigid motors are being replaced in collaborative spaces by highly responsive, compliant actuators that can be both powerful and gentle. This shift relies heavily on hardware from industry leaders such as SMC Corp. (6273) and Harmonic Drive Systems (6324).
However, the hardware alone isn’t enough. With AI helping motors detect electromagnetic responses to physical force, robots can instantly interpret and adapt to unpredictable, deformable environments. This level of dynamic interaction and real-time physical understanding would simply not be possible without AI.
The Research-Driven Advantage
The transition to physical AI represents a supercycle of industrial innovation. Navigating a space moving this quickly requires more than just chasing headlines about the latest humanoid startup or proprietary AI model. It requires a deep, fundamental understanding of the underlying technologies making these advancements possible. This is exactly where a research-driven strategy, guided by world-renowned robotics pioneers and industry experts, becomes an invaluable advantage.
By continuously monitoring the global value chain, our team can look past the noise to identify the true foundational winners of this revolution, the companies building the vital sensing and actuation layers, the localized edge AI, and the enterprise integration that makes physical AI a reality. While the exact shape of the future economy remains impossible to predict, the evidence is clear: Robotics will be the key to building it. By targeting the intelligent ecosystem that is physically driving this shift, we are positioning the index for whatever comes next.
ROBO is the underlying index for the ROBO Global Robotics & Automation ETF (ROBO), the L&G ROBO Global Robotics and Automation UCITS ETF (ROBO.LN), and the Global X ROBO Global Robotics & Automation ETF (ROBO.AU).
Related Research
Webcast: From Digital to Physical: AI’s Move into the Real World
AI Beyond the Chatbot: The New Value Chain
The Hidden Robot
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