From assembling cars to driving them, running data centres and even – with human guidance – performing medical procedures, robots are moving from science fiction to fact.
It's a revolution that is gathering momentum for two reasons in particular. The first is unfavourable demographics.
The world’s population is getting older, reducing the pool of available labour. Globally, the percentage of people aged over 60 is forecast to double to 22% by 2050 from 11% in 2010.https://www.who.int/news-room/fact-sheets/detail/ageing-and-healthThis will lead to a rise in the number of retirees relative to workers, or what economists call the dependency ratio. Without somehow compensating for this, productivity and economic growth will both slow.
Fortunately, technology is stepping into the breach. This is the second force transforming the robotics industry. Major advances in machine learning such as generative artificial intelligence (AI) have changed how robots interact with their environment. This means they can perform more complex tasks in a far broader range of settings, from the factor floor to the restaurant table.
Other developments in AI, meanwhile, are shortening the research and development cycle for robotics and automation, enhancing the data analysis, predictive capabilities, and virtual simulations which are crucial in the design and training phases of new machines. All this means robots can be developed more quickly, cheaply and effectively.
The interplay between demographic trends and technological advances - and its effect on the economy - was explored in a recent report by the Pictet Research Institute (PRI). The study found that the interaction of these two forces is ushering in a new technological era - one that will see the economy powered by automation, AI and gains in productivity.
According to the PRI, the adoption of automation technology is advancing most quickly in countries that are experiencing a more rapid ageing of their populations. In Japan, South Korea and China - which are each facing labour shortages due to a rise in the number of retirees - the robot density, or number of robots per worker, has risen to 40 per 1,000, nearly quadruple the global average.
High robot density tends to bring improvements in productivity, the study found. Cross-country manufacturing data indicates that increased robot density contributes approximately 0.4% to annual GDP growth. Equally important for economic growth, the PRI said, is the fact that AI, in contrast to other significant tech breakthroughs such as electricity or the Internet, appear likely to avoid a long J-curve dip, the period when capital spending on an innovation continues to rise without yet yielding a return (see Fig. 1). Its swifter advance to profitability is partly due to the knowledge and experience gained from previous innovation waves.
All of which promises to bring new investment opportunities and risks for tech investors. And there is perhaps no tech industry that will benefit more from such trends than robotics.
Productivity J-curve across general-purpose technologies
Source: Pictet Research Institute. Based on empirical synthesis from Acemoglu (2025), Acemoglu & Restrepo (2020), Atkeson & Kehoe (2007), Autor (2024), Brynjolfsson et al. (2021), Brynjolfsson & Hitt (2003), Devine (1983), IFR (2024b), Jorgenson & Stiroh (2000), McKinsey (2023).
Strong demand for robots
The adoption of robotics has come in two distinct phases. The first involves the development and deployment of substitution robots, those which replace scarce labour. The second phase is characterised by the proliferation of productivity robots, or machines which enhance output and efficiency.
Over the past decade, the tech industry has seen the flowering of several new productivity robotic technologies, ranging from robotaxis and autonomous vehicles to robotic arms and humanoids.
Robocars have witnessed especially strong growth. Autonomous ride-hailing services are transforming urban mobility, offering cost-effective, sustainable, and convenient transportation solutions. This year is expected to see the launch of a number of new autonomous vehicle models, as well as the debut of robotaxis on London’s streets. Globally, the autonomous vehicle market is forecast to double to USD400 billion over the next five years, then continuing to grow rapidly.
Demand for humanoid robots is also expected to accelerate to plug the productivity gap, particularly in the US, which is facing a labour shortage of some 2 million people by the end of this decade,OECD, Deloitte, FRED, Goldman Sachs Research .China should add to that demand given that its labour costs have more than doubled since the start of the centuryHaver, UBS.
At the industry level, demand for collaborative robots looks likely to be especially strong in closed work environments, such as car factories and data centres (where they do not mind the heat, and do not need light). By 2050, there could be over 5 billion humanoid robots in operation, creating a global market worth around USD5 trillion.Morgan StanleyOver time they will expand to the consumer segment, taking on tasks such as cleaning.
Worldwide annual installations of industrial robots, thousands of units
Source: World Robotics 2025
Opportunities from head to toe
Interestingly, it isn’t always the robots themselves that present the most attractive investment opportunities. Relatively few companies manufacture them, and many of those are unlisted. The most rewarding investments are found among the many more innovative businesses that provide the technology used to build the robot from head to toe, including hardware and software such as central processing units, machine vision, sensors and articulated arms (or grippers).
The value of semiconductors in an average humanoid robot, for example, is nearly three times greater than that in an average car. The total addressable market for humanoid semiconductors is likely to exceed USD300 billion within two decades, according to Morgan Stanley.
In our robotics strategy, we hold companies that are essential enablers of humanoid robots, supplying parts, technologies or software. That includes companies such as Keyence and Cognex that help robots sense, perceive and interpret their environment; companies that supply semiconductors (Nvidia, AMD and Marvell design chips that will act as the “brain” of the robot, while analog semiconductors from Infineon or NXP may be used in the “body” of these robots for power management or motor control). If we go further in the value chain, semiconductor capital equipment manufacturers provide the tools and technologies necessary for the fabrication of the semiconductor devices used in these robots.
The stars have thus aligned for a robotic revolution. An ageing population and a shrinking labour force are driving demand, at the same time as technology is making robots ever more efficient and cost-effective. This presents opportunities for stronger economic growth and improved productivity – as well as for attractive investment returns across the whole robotic value chain.
