Nvidia and Microsoft are better robotics plays than Tesla. Nvidia sells processors and AI for robots, with strong growth ahead.
Microsoft dominates AI cloud, crucial for robot updates.
Both target a huge market.
What happened
Nvidia and Microsoft are highlighted as two robotics stocks to buy and hold, with Nvidia's GR00T AI foundation model for humanoid robots and Jetson Thor supercomputer, already used by Amazon Robotics and Boston Dynamics, and Microsoft's Azure Cloud revenue accelerating 41% in Q4 2026.
Why it matters
The robotics market could reach $2.5 trillion by 2035, and Nvidia's physical AI revenue is currently $10 billion annually, expected to hit $100 billion over the next decade. Microsoft, as the second-largest cloud player with 21% market share, is positioned to benefit from AI cloud computing, which could grow from $133 billion to $780 billion by 2034.
What to watch
Nvidia's CEO Jensen Huang has set a high bar: physical AI revenue reaching $100 billion in the next decade. Microsoft's Azure Cloud annual sales have already hit $100 billion, so how these companies execute on robotics and cloud AI will be key.
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The article argues that Tesla's robotics transition is risky due to its heavy spending and EV focus, while Nvidia and Microsoft offer more established paths. Nvidia's strategy involves selling processors and providing a foundation model (GR00T) and a safety system (Halo) to enable robotics companies. JPMorgan's report indicates physical AI robots have only about 10% of human brain equivalence, suggesting significant room for improvement, which could drive demand for Nvidia's products. Microsoft's Azure cloud provides the infrastructure needed for robot updates and edge computing, and the AI cloud market is projected to grow substantially. Together, these companies tap into the $2.5 trillion robotics market, with Nvidia aiming for $100 billion in physical AI revenue over the next decade, a target that implies significant growth from its current $10 billion annual run rate.
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