How can you make investments in physical AI?

Artificial intelligence is becoming more and more tangible and has the potential to drastically alter our way of life

How can investors get noticed?

The unexpected announcement that Tesla would halt production of two of its flagship automobile products in order to free up more resources to produce robots was one of the main stories when the company released its Q4 results in January.

Following the earnings announcement, Tesla CEO Elon Musk called industry analysts and stated, "We are going to take the Model S and X production space in our Fremont factory and convert that into an Optimus factory." "It is time to end the S and X programs and transition to an autonomous future, which is a little depressing.

This highlighted the rapid emergence of what is increasingly being referred to as physical artificial intelligence (AI) within the tech industry, as well as a strategic shift that Tesla (NASDAQ:TSLA) has been planning for years, particularly since the launch of its robotaxi in Austin, Texas last year.

The integration of AI into tangible objects is known as physical AI. Drones and smart warehouses are just two examples, but the most obvious examples are self-driving cars and highly advanced robots.

Pierre Debru, head of research for Europe at asset manager WisdomTree, stated that physical artificial intelligence is not a single sector but rather a rapidly developing ecosystem in which intelligence is being incorporated into machines that function in the real economy.

On January 31, 2026, at the Tesla showroom in Yeouido, Seoul, a person wearing a humanoid robot costume called the Tesla Optimus stands next to the recently released Tesla Model 3.

Physical AI, such as humanoid Optimus robots and self-driving cars, is seen by Tesla as the way of the future.

Humanoid robots such as Tesla's Optimus and the Walker S2, an industrial humanoid robot from Chinese competitor Ubtech Robotics (HK:9880) that can replace its own battery on its own when it runs low, represent a striking advancement over previous robot models that, while certainly useful for factory automation, don't quite reach the fringes of science fiction.

Physical AI advancements.

For people who live in places like Austin or Los Angeles, where self-driving cars are already common, this is one of the most tangible applications of physical AI.

However, by year's end, self-driving cars might also be a reality in the UK. Legally, automated vehicles will be allowed on UK roads this year thanks to the Automated Vehicles Act.

Alphabets' (NASDAQ:GOOGL) self-driving car division, Waymo, is starting a pilot program in April.

The growing effectiveness of robotic surgeons is another highly praised example of physical AI in action.

Surgeons can execute robot-assisted procedures more precisely and possibly remotely with the use of tools like Da Vinci from Intuitive Surgical (NASDAQ:ISRG). Thanks to developments in haptic technology, the most recent iteration of the Da Vinci robot can accurately replicate a human surgeon's sense of touch by sensing the force applied to tissue during surgery.

On December 2, 2025, in Barcelona, Spain, a surgeon uses the Da Vinci robot to perform a stomach operation in one of the Hospital de Sant Pau's renovated operating rooms.

Another example of physical AI in action is robot-assisted surgery, such as that made possible by the Da Vinci robot from Intuitive Surgicals.

Intuitive Surgical claims that more than 20 million people have had surgery using Da Vinci robots.

How to make investments in physical AI.

It is worthwhile to take into account both the specialized businesses listed in this article and the entire ecosystem when deciding whether to invest in physical AI.

One could argue that Jensen Huang, the CEO of Nvidias (NASDAQ:NVDA), popularized the term "physical AI." Since Nvidias Cosmos is one of the top platforms for physical AI, it's a good place to start as a picks and shovels game.

Similarly, some of the other major players in the big tech industry are developing machine learning systems that allow physical AI to get better with experience. For example, Boston Dynamics' next generation of Atlas robots is built on top of Alphabets Gemini, a massive language model.

Considering that it owns Waymo, a self-driving car startup, Alphabet is also a respectable AI investment.

In order to gain diversified exposure to businesses in the field, you may want to invest in physical AI through an exchange-traded fund (ETF).

WisdomTree introduced the Physical AI, Humanoids, and Drones UCITS ETF (LON:PAIG) on February 19. It is the first ETF in Europe that focuses exclusively on physical AI. Top holdings include Nvidia, Ubtech, and Rainbow Robotics (KOSDAQ:277810), a robotics company based in South Korea.

Although PAIG is the first pure-play physical AI ETF in Europe, there are other options that have been around for a while and have a slightly different focus. The ARK Artificial Intelligence and Robotics UCITS ETF (LON:ARCI) has a substantial exposure to physical AI and robotics companies such as Tesla and Teradyne (NASDAQ:TER), but it also holds some non-physical AI companies.

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