A key driver behind the continued interest in Tesla (NASDAQ: TSLA) stock is the company’s exposure to humanoid robot technology. Tesla has been working on its humanoid, Optimus, for years now and it’s hoping to ramp up production soon.
But is Tesla the best stock for the humanoid robotics revolution? Probably not, in my personal view. Here’s why I think that.
Impressive technology
Tesla’s Optimus robot is certainly impressive. Powered by a version of the company’s Full Self-Driving (FSD) technology – adapted for bipedal navigation – it can walk, talk, dance, and more.
CEO Elon Musk believes that his Optimus robots will be able to do “anything you want” including cleaning your house, walking your dog, and doing your shopping. And he’s hoping that in the future, the company will be able to sell its humanoids for $20,000 to $30,000 – less than the cost of a car.
Lots of competition
The thing is though, there are loads of companies globally developing humanoid robots today and many have equally impressive products. Some examples of businesses here include XPeng, Figure AI, Boston Dynamics, UBTECH, and Agility Robotics.
Given that so many companies have their own prototypes, I think it’s highly likely that humanoid robots will be commoditised in the future. In other words, there will be so much competition that it will be hard for those who manufacture them to generate huge profits.
Look at the supply chain
Given this potential backdrop, I reckon component or software makers may be better investments to consider than Tesla and other companies that manufacture the robots. I think it’s likely that companies that produce technology for the brains or bodies of humanoids will do really well as the industry expands.
Analysts at Goldman Sachs seem to agree with me. In a recent research report on humanoid robotics, they wrote: “Our analysts project the best investment opportunities for now could lie in component makers that form the supply chain.”
My humanoid robotics stock
One stock that I see a huge amount of potential in (and have bought myself) is Hesai Group (NASDAQ: HSAI). It’s a small Chinese company that’s a market leader in LiDAR (remote sensing) technology.
Now, not all humanoids use LiDAR for perception. Tesla’s Optimus, for instance, relies on cameras.
However, many do. For example, of the five companies I mentioned above, four use LiDAR in their humanoids (and at least two work with Hesai).
Today, Hesai is having lots of success in the advanced driver assistance systems (ADAS) and self-driving car space. Yesterday (11 November), for example, it reported 48% year-on-year revenue growth for Q3.
Looking ahead, I expect it to have similar success with humanoids as the technology goes mainstream. Because it has industry-leading products and relationships with many robotics companies.
“Looking to the decade ahead, we’re excited to evolve into a full-spectrum technology infrastructure builder, pioneering the next wave of innovation that will redefine how cars and robots perceive and interact with the world!”
Hesai Group
Now, the fact that Hesai is a Chinese company introduces a lot of risks. We all know that tension between the US and China is sky-high today.
Taking a long-term view though, I see a huge amount of potential. If an investor is looking to capitalise on the humanoid robotics revolution, I think this stock is worth a look.
