Artificial intelligence (AI) investors may have just found their new favorite use case. A start-up called Figure AI raised $675 million of fresh venture capital (VC) funds at a sizzling valuation of $2.6 billion.
Even more impressive? The company's investor roster includes Microsoft, Nvidia, Amazon founder Jeff Bezos, Cathie Wood's Ark Invest, Intel Capital, and OpenAI.
Figure AI is developing humanoid robots, an area that has massive potential to disrupt both the labor market and household settings. Let's explore why so many high-profile technology businesses may be interested in Figure AI. Moreover, I'll outline why I see Tesla (TSLA +2.45%) emerging as a big winner from this newfound interest in humanoid robotics.
NASDAQ: TSLA
Key Data Points
Humanoid robotics are all the rage, but...
On the surface, humanoid robots might seem like something out of a science fiction novel or a dystopian Hollywood thriller. But believe it or not, the market for humanoid robots is much bigger than you might think.
While widespread commercialization of humanoid robotics is still likely years away, investors can get a glimpse into the impact this technology can have by looking at two of the world's leading e-commerce businesses: Amazon and Alibaba.
Both companies have made significant investments in robotics -- namely, integrating the technology throughout warehouse operations. This allowed each company to achieve significant efficiencies as it relates to logistics and order fulfillment.
When it comes to humanoid bots specifically, this isn't OpenAI's first foray in the space. A year ago, the company joined famed venture capital (VC) firm Tiger Global when it backed 1X, a Norwegian start-up developing human-like androids. More recently, 1X announced an additional $100 million of funding in January.
The deal with Figure AI is just another stat-line showing that there is a big interest in this area of robotics. Furthermore, given the number of artificial intelligence (AI) businesses fueling these investments, it's fair to think that robotics could present a lucrative source of growth beyond current AI applications.
However, while it's exciting to see so many companies show interest in humanoid bots, keep in mind that this technology isn't exactly new.
Image Source: Getty Images
Tesla has been developing this technology for years
You're probably familiar with Tesla for two reasons. First, the company's CEO, Elon Musk, is in the headlines on a daily basis. Second, the company's electric vehicles (EV) are a sensation.
What you may not be so familiar with is Tesla's ventures outside of automobiles. The company has some interesting projects covering self-driving as well as robotics. Tesla's humanoid robot, called Optimus, is widely considered to be one of the company's biggest future growth drivers.
The company's long-term vision is to integrate these bots into Tesla's factories to help upgrade vehicle production. In theory, this can unlock efficiencies as it relates to labor costs -- much like what Amazon and Alibaba have done in their warehouses. Moreover, Tesla also plans to commercialize Optimus for consumers as the bot is being designed to help automate daily activities including laundry, among other mundane tasks.
Who will win the robotics market?
Following the fundraise, Figure AI's co-founder, Brett Adcock, posted the following on X (formerly Twitter):
Optimus
-- Elon Musk (@elonmusk) March 1, 2024
As you can see, Musk replied with a curt counterpoint. While this is pretty typical trolling behavior from Musk, it makes you wonder which company may possess the superior long-term gains.
On one hand, Figure AI shouldn't be overlooked, given that it was able to entice an incredible roster of deep-pocketed investors. But on the other hand, Tesla has $29 billion of cash on its balance sheet and the company is consistently generating positive free cash flow -- which it can use to further invest in growth areas such as robotics.
According to Figure AI's website, the addressable market for humanoid robots is at least $42 trillion -- largely driven by the market for manual labor. When you layer consumer household applications on top of this, the serviceable market is even higher.
Those statistics alone tell me one thing -- there will probably be more than one winner in the humanoid robot market. But to me, Tesla still emerges as the biggest winner. Should Tesla see success with Optimus, it's very possible that the company begins to license this technology breakthrough -- much like what it is doing with its supercharger network.
The subtle theme with Optimus is that it represents both a way for Tesla to diverse its revenue stream, all while bolstering its existing cash cow -- the car business. So while I find the Figure AI deal interesting and encouraging, ultimately I see the fundraising as further validation of Optimus, if anything.
