Key Points
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Nvidia is already generating $10 billion in annual physical AI revenue and thinks it could earn 10 times that much a decade from now.
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Advanced robotics will rely on robust cloud computing infrastructure, making it a big opportunity for Microsoft’s Azure.
- 10 stocks we like better than Nvidia ›
Tesla (NASDAQ: TSLA) CEO Elon Musk has repeatedly said that investors should think of his company as a robotics and automation company. And, to its credit, Tesla is making some progress in this direction with its Optimus humanoid robot and tests of its Robotaxi self-driving vehicle service in a handful of U.S. cities.
But betting on Tesla’s transition to robotics is pretty risky. The company has been an EV company for years, and it’s spending heavily as it remakes itself.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a “Double Down” signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same “Total Conviction” signal is flashing for a company 1/100th the size of Nvidia. Continue »
Investors looking for two better robotics stocks that could successfully tap into the $2.5 trillion robotics market (by 2035) should consider owning Nvidia (NASDAQ: NVDA) and Microsoft (NASDAQ: MSFT) for the long haul. Here’s why.
Image source: Tesla.
Nvidia has a unique robotics position
Nvidia’s management believes physical AI — including robotics — will be one of the next big tech waves, and the company is preparing for the transition now.
One important way it’s positioning itself to benefit from physical AI is through an open-source AI foundation model for humanoid robotics, called GR00T. The AI is essentially a general brain for emerging robotics companies to use to help train and teach their robots new tasks. The company also created a full-stack safety system for robots, called Halo, which combines sensors, software, and processors into a complete safety system for robotics and industrial companies.
Of course, the most important way Nvidia will benefit from robotics is by selling its processors to companies that will put them into their machines. To help get there, Nvidia developed the Jetson Thor supercomputer, which companies use for real-time speech and vision processing. And Amazon Robotics and Boston Dynamic are already using it for some of their robots.
If Nvidia can help robotics companies perfect their robots, it could help set them apart in selling more processors in the future. A recent report from JPMorgan shows that physical AI robots have only about 10% of the brain equivalent compared to a human, and to make them truly useful, they’ll need to be far more intelligent.
Nvidia’s physical AI revenue is just getting started, and the company has high expectations. CEO Jensen Huang recently said that Nvidia’s physical AI revenue is currently $10 billion annually and will reach $100 billion over the next decade.
Physical AI needs a strong cloud player
While many robots will have physical processors to help them make decisions and perform functions, they all need robust cloud infrastructure for updates and edge computing to make them smarter and far more capable.
And one of the best ways to play the AI cloud angle is with Microsoft. The company’s Azure Cloud revenue accelerated 41% in Q4 2026 (which ended July 29), reaching annual sales of $100 billion.
The AI cloud infrastructure Microsoft is building now could be instrumental in enabling robotics in the coming years, as more companies adopt physical AI and need cloud computing to improve their robotics. Estimates from Fortune Business Insights show that the AI cloud market could grow from $133 billion this year to $780 billion by 2034.
Microsoft is already the second-largest cloud player after Amazon, with 21% of the market, making it well-positioned to benefit as AI cloud computing expands.
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JPMorgan Chase is an advertising partner of Motley Fool Money. Chris Neiger has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, JPMorgan Chase, Microsoft, Nvidia, and Tesla. The Motley Fool has a disclosure policy.
