Asian robot makers see stocks surge up to 55% on physical AI boom

A new investment narrative is taking hold in Asian markets as capital pivots from semiconductor stocks to the burgeoning field of “physical AI,” igniting a rally in robotics companies. Shares of South Korea’s LG Electronics Inc. surged 55% in a single week, while Japan’s Fanuc Corp. gained 10% after announcing separate collaborations with US technology giants, suggesting the AI trade is moving from pure computation to physical deployment.

“The rally in robotics stocks reflects the AI cycle moving from digital into physical deployment,” said Gary Tan, a portfolio manager at Allspring Global Investments. “‘Physical AI’ is emerging as the next leg of the AI trade.”

The surge was triggered by concrete deals. LG Electronics is reportedly in discussions with Nvidia Corp. on a humanoid robot partnership, sending its shares to a new 52-week high and extending its one-month gain to nearly 80 percent. Fanuc, the world’s largest industrial robot manufacturer, announced it will integrate Alphabet Inc.’s Google Gemini AI and Intrinsic robotics platform into its 1.1 million installed robots, causing its shares to jump 16 percent intraday.

This shift threatens to reorder the AI value chain, where chipmakers like Nvidia have captured the majority of investor attention. If the software intelligence layer provided by Google and the specialized hardware from companies like Fanuc and LG prove effective, the market for upgrading the world’s existing industrial base could represent a multi-billion dollar opportunity, with the physical AI market projected to hit $15.2 billion by 2032.

The Android Play for Factories

Google’s partnership with Fanuc is being compared to its Android strategy for mobile phones. By providing a common software layer—the Intrinsic platform—Google aims to become the underlying operating system for a wide range of industrial hardware, not just Fanuc’s. This allows manufacturers to mix and match robotic hardware from different vendors like KUKA and Universal Robots, both Intrinsic partners, without rewriting their core software. The Fanuc deal, with its massive 1.1 million unit installed base, serves as the “Samsung moment” for this strategy, proving the model at an industrial scale.

For Fanuc, the integration of Google’s Gemini Enterprise models provides a powerful foundation for its physical AI stack. This will enable its robots to understand natural language instructions and operate more autonomously in unstructured factory environments. The Japanese firm, which already partners with Nvidia for simulation using its Isaac and Omniverse platforms, now possesses a formidable two-platform AI stack that combines top-tier foundation models with advanced physical simulation.

LG’s Two-Pronged Assault

LG Electronics’ stock rally is backed by a dual-pronged strategy in the robotics and AI infrastructure space. The company unveiled its own robot actuator brand, ‘LG Actuator Axium,’ in January, leveraging its decades of motor technology expertise from its home appliance division. Actuators are critical components that function as a robot's muscles and joints, and the market anticipates LG will become a key supplier, with external sales expected to start next year.

Beyond components, LG is accelerating the commercialization of its humanoid robot, ‘Cloid,’ with a target of 2028. The rumored collaboration with Nvidia is expected to be central to this effort. Separately, LG is also positioning itself as a key supplier for AI data centers, reportedly conducting quality tests to supply advanced cooling systems to major North American tech companies, diversifying its exposure to the broader AI build-out.

A Pan-Asian Push

The trend extends beyond Japan and South Korea. China has established an early lead in building out capacity for robot manufacturing, with local humanoid robots achieving new milestones. In Taiwan, shares of Hiwin Technologies Corp., a key component maker, also jumped. South Korea’s Hyundai Motor Co. gained on news that the nation’s military is exploring a partnership to deploy its robotics technology, which includes the designs of its subsidiary, Boston Dynamics.

While the investor enthusiasm is palpable, the path to mass commercialization for advanced robotics is complex. “Physical AI has to deal with safety, regulation, factories, supply chains and customer trust far more than generative AI,” said Charu Chanana, chief investment strategist at Saxo Markets. For now, the stock gains are pricing in future potential, and companies will face the challenge of delivering earnings to justify their new valuations.

This article is for informational purposes only and does not constitute investment advice.