Robotics Revolution Fueling Efficiency

Golden Age of Automation

We’ve talked a lot about the food chain from AI. The growth of AI requires more data centers, a massive grid repair, and power, which we are undersupplied.  One other area that will benefit from this theme is robotics. It will play an important role over the next decade, if not more, in our view. Robotics adoption has recently strengthened as the costs related to advanced hardware have improved to a point where mass adoption is becoming attractive. Public data indicates that 4.66 million industrial robots were operational by the end of 2024, which represents a 9% year-over-year increase.^[1] This adoption is likely to continue as we see trending price deflation in advanced robotics components. Costs for actuators, reducers, sensors, and chassis manufacturing have plummeted, being accelerated by tightly integrated Chinese supply chains, scaling the production of previously niche motors and gear systems. Niche robotics machinery, such as servomechanisms and smart actuators, has seen costs cut in half, falling from about $1,200 to $600 in just two years. A prime example of these savings is Unitree’s G1 humanoid. While comparable products cost up to $500,000 in 2023, the G1 is launching at a cost of $16,000, a 97% decrease in price.

This deflation is further amplified by Nvidia’s Vision Language Action (VLA) ecosystem. VLA collapses all the required functions of a robot, like perception, reasoning, and control, into a single component that streams commands in real time. This allows robots to learn skills from video and fine-tune overnight, effectively eliminating months of laborious coding. While the concept of humanoids is exciting, we believe the immediate opportunity lies in cobots, autonomous mobile robots, and logistics automation, where the cost per task is currently highly competitive with human labor.^[2]

Teradyne: The Robotics Pure Play

Teradyne remains one of the leading pure play robotics platforms, with its robotics division now accounting for approximately 25% of total revenue.^[3] By acquiring Universal Robots and MiR, the company has created a robotics division focused on two key areas: cobots and autonomous mobile robots (AMRs). Cobots (Collaborative Robots), like those designed by Universal Robots, are designed to work safely alongside humans, assisting with tasks like machine tending, assembly, and packaging. They are typically robot arms that focus on dexterity and precise manipulation. In contrast, AMRs (Autonomous Mobile Robots), like those offered by MiR, are wheeled platforms that use smart navigation to move materials and products dynamically through complex environments, ideal for adoption in existing warehouse and factory layouts.

Universal Robots is the global leader in cobots and the largest revenue contributor for Teradyne’s robotics division. With over 100,000 units shipped and exceeding 50% market share in certain regions, Universal Robots has historically grown its sales in the high-teens to mid-20% annually.^[4] Universal Robots is capturing opportunity through Amazon’s Vulcan project. Amazon manually stows 14 billion items per year, and the Vulcan project targets automating about 8% of this volume. To meet this target, the estimated fleet requirement is roughly 5,100 Vulcan robots. With a system cost of approximately $200,000, this represents a $1 billion revenue opportunity for Teradyne.^[5] Management also confirmed that robotics tailwinds from a large e-commerce customer will begin to ramp in the second half of 2026.

Amazon: The World’s Largest Robot Operator

Amazon Robotics is now the largest robotics operator in the world with a fleet exceeding one million robots. Robotics drives Amazon’s business as a cost efficiency and capacity engine powering fulfillment, delivery, and logistics, which results in a lower fulfillment cost per unit, increased throughput capacity, and faster delivery speeds. With the aid of robotics, Amazon will avoid hiring approximately 400,000 employees over the next ten years by adding new fulfillment centers with meaningful automation. This implies over $2 billion in annual savings by avoiding headcount that would have otherwise been added without automation.^[6] This efficiency drive contributes to an annual productivity gain of 3% to 5% which equates to roughly 3 million incremental units each year.

Amazon’s portfolio extends outside of cobots with Proteus, the first fully autonomous Amazon Mobile Robot that uses sensor fusion and onboard vision systems to operate in shared spaces with humans, unlike traditional Kiva robots restricted to fenced areas. Additionally, Amazon has begun testing humanoid robot pilots, such as Digit via Agility Robotics, for tasks requiring human-level dexterity and navigation in non-standard warehouse areas. This sustained investment in robotics and operational technology positions Amazon to not only maintain its dominant market share but also unlock significant long-term margin expansion in its core retail business.

Walmart: Aggressive Automation Adoption

Although Walmart is still in the early innings of automation, it is aggressively ramping up its deployment and adoption. The company is furthest along in its fulfillment centers, where new automated sites are proving about twice as productive as their legacy counterparts. Behind this growth are major infrastructure investments, as Walmart accounts for approximately 50% of warehouse automation capex.^[7] This investment has led to over 60% of U.S. stores now receiving freight from automated distribution centers, and over half of all e-commerce volume running through these automated systems, successfully driving double-digit shipping cost reductions.^[8]

This high level of throughput and efficiency supports Walmart’s Q3 results, which saw global e-commerce grow 27% and nearly 35% of store-fulfilled orders delivered in under three hours.^[9] Walmart is now testing a cutting-edge AI-supported system that uses real-time driver location and fulfillment capacity to give online shoppers down-to-the-minute delivery estimates, a capability that most retailers do not have on scale. This AI-powered ETA engine is a direct result of the foundational automation flexibility built across its entire omni-channel supply chain.

Warehouse Automation CAPEX Chart^[10]:

Rockwell Automation: From Controls Backbone to AMR Platform

Rockwell Automation is capitalizing on the industrial manufacturing shift by moving from a controls backbone to a robotics platform owner. Historically, Rockwell focused on providing the core safety controllers, motion control, and networking software for third-party robots. That changed in 2023 when Rockwell acquired OTTO Motors, a heavy-duty AMR manufacturer. OTTO AMRs are specifically designed for rugged factory floors and heavy industrial environments like automotive plants, capable of moving payloads up to 1,900 kilograms.

The accompanying OTTO Fleet Manager software is crucial, allowing customers to control large fleets of robots and integrate them directly with their existing factory control systems. This allows Rockwell to sell both the foundational control systems and the actual mobile robots needed for modern manufacturing. This strategy is timed to benefit from the $2.5 trillion of new manufacturing capacity that has been announced in the United States, signaling a massive reshoring trend.^[11] Rockwell expects new capacity orders to grow in the strong double digits in fiscal year 2026.^[12] These systems provide immediate benefits for customers, such as a documented 20% ROI and significant reductions in labor for specific workflows after implementing OTTO AMRs.^[13] Rockwell’s move ensures it is the key partner for companies to modernize their domestic production lines.

The transformation driven by robotics signals that automation is no longer a luxury but an economic necessity. Cobots, such as those from Universal Robots, are safely boosting efficiency in tasks requiring dexterity, while AMRs, including those from MiR and OTTO Motors, revolutionize logistics by dynamically routing materials and improving worker safety. Ultimately, this sustained investment in robotics and operational technology position corporations with large logistics and handling infrastructure, like Amazon and Walmart, to not only maintain its market share but also unlock long term margin expansion in its core businesses.

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Sources:

^[1] World Robotics 2025, as of September 2025

^[2] Unitree Robotics, as of December 20025

^[3] Bloomberg, as of December 2025

^[4] Teradyne, as of November 2025

^[5] Bloomberg, as of December 2025

^[6] Wolfe Research, as of December 2025

^[7] Barclays, as of December 2025

^[8] Deutsche Bank, as of November 2025

^[9] Walmart, as of November 2025

^[10] Barclays Research, as of December 2025

^[11] Bloomberg, as of December 2025

^[12] Bloomberg, as of December 2025

^[13] Rockwell Automation, as of December 2025

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