By Anjali Bastianpillai, senior client portfolio manager in Pictet’s thematic equities team AI has already transformed the digital economy and is now starting to change the physical one, too. The technology is being embedded in an increasing number of machines that can sense, move, and operate in a physical space. Physical AI combines advanced computing models with sophisticated hardware: sensors, actuators (which convert electrical signals into physical motion), processors and machine vision. Together, they create robots and autonomous systems that can operate safely and productively in real environments. Humanoid robots and autonomous vehicles are the most visible examples of this tech in action. The autonomous vehicle market (including public transport) is estimated to grow to $1.2trn by 2040, thanks to a compound annual growth rate (CAGR) of 44%1. As the technology continues to mature, the rate of adoption is accelerating: the proportion of US rideshare miles completed by robotaxis is forecast to increase from 0.4% in 2025 to 7.5% in 2030. We also expect to see autonomous trucks and public transport, as well as vehicles used in industry, delivery, mining, defence, farming and logistics. That, in turn, will boost the growth of related industries such as mobility as a service (MaaS), software licensing and fleet management. Physical AI applications: Robots in healthcare and industry Many other applications of the technology are already commercially available and highly scalable. According to consultancy PwC, humanoids and autonomous driving will account for only half of the global physical AI market by 2030. In healthcare, robotic surgery systems illustrate how AI-enhanced robotics can deliver precision, consistency and improved patient outcomes at scale. Robots built by Intuitive Surgical, one of the leading companies in this field, treated more than 3.1 million people worldwide in 2025. With its da Vinci systems surgeons can use 3D vision and