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Grab These ETFs to Capitalize on the Physical AI Wave
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Key Takeaways
Physical AI spans robotics and autonomous vehicles, with rapid market growth projected through 2032.
NVIDIA, Tesla and ABB are advancing physical AI through chips and autonomous systems.
Physical AI ETFs offer diversified exposure to robotics and automation while mitigating single-stock risk.
Artificial intelligence (AI) is evolving at an extraordinary pace, moving beyond chatbots and content generation into something far more consequential: machines that can perceive, reason, and act autonomously in the physical world. Currently, physical AI represents the convergence of AI with robotics, autonomous vehicles, drones and smart manufacturing systems.
The growth prospects for this market reflect this momentum, with the global physical AI market projected to grow from $1.50 billion in 2026 to $15.24 billion by 2032, representing a 47.2% CAGR (as predicted by Markets & Markets).
For investors, this transformation is putting companies working on physical AI in the spotlight, and by extension, exchange-traded funds (ETFs) holding these stocks are emerging as compelling low-risk investment options to capture the trend.
Before examining these funds, it is important to understand the industry's key players and the extent to which physical AI is transforming the market. This broader perspective can help investors assess the growth opportunities and make informed investment decisions.
Key Players in the Transformation
Physical AI marks a fundamental shift from AI as a digital tool to AI as a system capable of driving real-world outcomes. As NVIDIA’s CEO mentioned last year: “AI’s next stage is called physical AI, where AI interacts with the physical world, and it means robotics.”
Several companies are currently leading this charge, with NVIDIA (NVDA - Free Report) at the center of the physical AI ecosystem. The company provides full-stack AI computing for physical AI and robotics through its GPUs, Jetson edge platforms, and Isaac robotics framework. NVDA has partnered with companies like Unitree to release open humanoid robot reference designs to accelerate academic and industry research.
Beyond humanoids, NVIDIA's Jetson and Hyperion platforms power autonomous tractors, mowers, delivery bots (like Serve Robotics), and L4 autonomous mobility solutions.
Tesla (TSLA - Free Report) is another key player in this space, which applies physical AI primarily through autonomous vehicles and mobility services, in addition to humanoid robotics. The company’s Cybercab is a purpose-built, driverless autonomous vehicle designed from the ground up without steering wheels or pedals, built specifically to run on Tesla’s physical AI driving models.
On the other hand, ABB (ABBNY - Free Report) applies physical AI — what it calls Autonomous Versatile Robotics (AVR) — to transform how industrial robots learn, adapt and operate in the real world. The company has partnered with NVIDIA to integrate Omniverse libraries into its RobotStudio software to create photorealistic, physics-accurate digital twins that close the "sim-to-real gap" in industrial robotics, with up to 99% accuracy, making physical AI deployable at scale.
Using AI-based learning models, including Vision-Language-Action models, the software enables robots to learn demonstrated tasks in simulation and validate their behavior across multiple virtual scenarios, reducing reliance on physical prototypes and on-site testing.
Regal Rexnord (RRX - Free Report) , another key player in this space, is expanding into physical AI and smart automation by supplying precision motion control, industrial powertrain components, and collaborative robotics that bridge digital software with physical machinery. The company joined forces with ABB Robotics to simplify integration of its GoFa cobots into 7th Axis Cobot Transfer Units (CTUs) from Thomson, one of Regal Rexnord’s leading linear motion brands.
Extent of the Transformation and the ETF Playbook
The transition to physical AI is not happening in isolation — it is an industry-wide overhaul spanning hardware components, software platforms and domain-specific robotics. According to a Markets and Markets projection, the industrial robotics segment within physical AI is projected to witness a staggering 56.7% CAGR through 2032, driven by widespread factory automation.
Because this physical AI transformation spans multiple industry players — from pure-play chipmakers like NVIDIA and EV/autonomy innovators like Tesla, to industrial automation leaders like ABB and motion control suppliers like Regal Rexnord — picking individual winners can be challenging in a rapidly evolving market.
Exchange-Traded Funds (ETFs) provide diversified exposure across this entire value chain, capturing both the high-growth software and hardware enablers alongside traditional industrial manufacturers. This thematic approach should help mitigate single-stock volatility while allowing investors to participate in the broader, long-term physical AI megatrend.
Physical AI ETFs to Grab
Considering the aforementioned discussion, investors interested to capitalize on the growing trends of physical AI and robotics may add the following ETFs to their portfolios:
WisdomTree Physical AI, Humanoids, and Drones Fund (WDRN - Free Report)
This fund, with net assets worth $17.3 million, offers exposure to companies enabling and deploying Physical AI across robotics, drones, and automation, capturing the transition from digital intelligence to real-world machine action and industrial transformation. NVDA holds the first spot in this fund, with 5.84% weight, while TSLA holds the second position with 5.64% weight.
WDRN charges 45 basis points (bps) in fees.
KraneShares Global Humanoid Robotics and Physical AI Index ETF (KOID - Free Report)
This fund, with net assets worth $345.1 million, offers exposure to companies engaged in humanoid and embodied intelligence-related business. RRX holds the first spot in this fund, with 2.25% weight.
KOID charges 69 bps in fees.
Global X Robotics & Artificial Intelligence ETF (BOTZ - Free Report)
This fund, with net assets worth $3.29 billion, offers exposure to companies positioned to benefit from the growing adoption and utilization of robotics and artificial intelligence. NVDA holds the fourth spot in this fund, with 8.07% weight, while ABBNY holds the fifth position with 7.96% weight.
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Grab These ETFs to Capitalize on the Physical AI Wave
Key Takeaways
Artificial intelligence (AI) is evolving at an extraordinary pace, moving beyond chatbots and content generation into something far more consequential: machines that can perceive, reason, and act autonomously in the physical world. Currently, physical AI represents the convergence of AI with robotics, autonomous vehicles, drones and smart manufacturing systems.
The growth prospects for this market reflect this momentum, with the global physical AI market projected to grow from $1.50 billion in 2026 to $15.24 billion by 2032, representing a 47.2% CAGR (as predicted by Markets & Markets).
For investors, this transformation is putting companies working on physical AI in the spotlight, and by extension, exchange-traded funds (ETFs) holding these stocks are emerging as compelling low-risk investment options to capture the trend.
Before examining these funds, it is important to understand the industry's key players and the extent to which physical AI is transforming the market. This broader perspective can help investors assess the growth opportunities and make informed investment decisions.
Key Players in the Transformation
Physical AI marks a fundamental shift from AI as a digital tool to AI as a system capable of driving real-world outcomes. As NVIDIA’s CEO mentioned last year: “AI’s next stage is called physical AI, where AI interacts with the physical world, and it means robotics.”
Several companies are currently leading this charge, with NVIDIA (NVDA - Free Report) at the center of the physical AI ecosystem. The company provides full-stack AI computing for physical AI and robotics through its GPUs, Jetson edge platforms, and Isaac robotics framework. NVDA has partnered with companies like Unitree to release open humanoid robot reference designs to accelerate academic and industry research.
Beyond humanoids, NVIDIA's Jetson and Hyperion platforms power autonomous tractors, mowers, delivery bots (like Serve Robotics), and L4 autonomous mobility solutions.
Tesla (TSLA - Free Report) is another key player in this space, which applies physical AI primarily through autonomous vehicles and mobility services, in addition to humanoid robotics. The company’s Cybercab is a purpose-built, driverless autonomous vehicle designed from the ground up without steering wheels or pedals, built specifically to run on Tesla’s physical AI driving models.
On the other hand, ABB (ABBNY - Free Report) applies physical AI — what it calls Autonomous Versatile Robotics (AVR) — to transform how industrial robots learn, adapt and operate in the real world. The company has partnered with NVIDIA to integrate Omniverse libraries into its RobotStudio software to create photorealistic, physics-accurate digital twins that close the "sim-to-real gap" in industrial robotics, with up to 99% accuracy, making physical AI deployable at scale.
Using AI-based learning models, including Vision-Language-Action models, the software enables robots to learn demonstrated tasks in simulation and validate their behavior across multiple virtual scenarios, reducing reliance on physical prototypes and on-site testing.
Regal Rexnord (RRX - Free Report) , another key player in this space, is expanding into physical AI and smart automation by supplying precision motion control, industrial powertrain components, and collaborative robotics that bridge digital software with physical machinery. The company joined forces with ABB Robotics to simplify integration of its GoFa cobots into 7th Axis Cobot Transfer Units (CTUs) from Thomson, one of Regal Rexnord’s leading linear motion brands.
Extent of the Transformation and the ETF Playbook
The transition to physical AI is not happening in isolation — it is an industry-wide overhaul spanning hardware components, software platforms and domain-specific robotics. According to a Markets and Markets projection, the industrial robotics segment within physical AI is projected to witness a staggering 56.7% CAGR through 2032, driven by widespread factory automation.
Because this physical AI transformation spans multiple industry players — from pure-play chipmakers like NVIDIA and EV/autonomy innovators like Tesla, to industrial automation leaders like ABB and motion control suppliers like Regal Rexnord — picking individual winners can be challenging in a rapidly evolving market.
Exchange-Traded Funds (ETFs) provide diversified exposure across this entire value chain, capturing both the high-growth software and hardware enablers alongside traditional industrial manufacturers. This thematic approach should help mitigate single-stock volatility while allowing investors to participate in the broader, long-term physical AI megatrend.
Physical AI ETFs to Grab
Considering the aforementioned discussion, investors interested to capitalize on the growing trends of physical AI and robotics may add the following ETFs to their portfolios:
WisdomTree Physical AI, Humanoids, and Drones Fund (WDRN - Free Report)
This fund, with net assets worth $17.3 million, offers exposure to companies enabling and deploying Physical AI across robotics, drones, and automation, capturing the transition from digital intelligence to real-world machine action and industrial transformation. NVDA holds the first spot in this fund, with 5.84% weight, while TSLA holds the second position with 5.64% weight.
WDRN charges 45 basis points (bps) in fees.
KraneShares Global Humanoid Robotics and Physical AI Index ETF (KOID - Free Report)
This fund, with net assets worth $345.1 million, offers exposure to companies engaged in humanoid and embodied intelligence-related business. RRX holds the first spot in this fund, with 2.25% weight.
KOID charges 69 bps in fees.
Global X Robotics & Artificial Intelligence ETF (BOTZ - Free Report)
This fund, with net assets worth $3.29 billion, offers exposure to companies positioned to benefit from the growing adoption and utilization of robotics and artificial intelligence. NVDA holds the fourth spot in this fund, with 8.07% weight, while ABBNY holds the fifth position with 7.96% weight.
BOTZ charges 68 bps in fees.