That's changing fast.
A new phase is emerging: Physical AI, intelligence embedded in machines that can see, reason, and act in the real world.
Robots assembling cars. Cars driving themselves. Drones delivering packages. AI is no longer just thinking.
Bank of America's thematic investing team, led by analyst Martyn Briggs, sees this as a trillion-dollar transformation already underway.
The bank notes that value is shifting from digital models to physical machines, robots, autonomous vehicles, drones, that are starting to scale and operate in the real world.
"Intelligence moves from screens to machines," Briggs said in a report released Thursday.
Nvidia CEO Jensen Huang agrees.
"The ChatGPT moment for physical AI is here, when machines begin to understand, reason, and act in the real world. The next wave of AI is physical AI," Huang said at CES 2026.
What Makes Physical AI Different?
The first wave of AI focused on content creation and chatbots; the next wave embeds intelligence in the physical world.
Bank of America defines Physical AI as systems in machines like humanoid robots, autonomous vehicles, and drones, capable of perceiving environments, reasoning, and executing actions. These systems use multimodal world models, trained with both vision and action data, to predict, plan, and operate autonomously.
Robotaxis are already operational in multiple cities, and advanced driver-assistance systems are set to reach mass adoption in China by 2030.
As hardware costs fall and onboard computing improves, removing drivers will significantly reduce costs in ride-hailing and freight, transforming mobility into a software-defined, AI-driven platform.
Humanoid Robots Move Into Production
“Humanoid robots have emerged as the most visible frontier of this shift,” Briggs wrote.
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