Jensen Huang Just Called Humanoid Robots a $40 Trillion Market. Here’s Why Wall Street Is Loading Up on Physical AI Stocks
Jensen Huang Just Called Humanoid Robots a $40 Trillion Market. Here’s Why Wall Street Is Loading Up on Physical AI Stocks
Michael WilliamsSun, May 31, 2026 at 11:20 AM UTC
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Nvidia (NVDA) announced Isaac Groot, its foundation model for humanoid robots, with Q1 FY2027 Data Center revenue of $75.25B up 85% year over year. Tesla (TSLA) is building production lines for Optimus designed for 1M robots annually at Fremont and 10M at Gigafactory Texas, targeting Gen 3 unveil in Q1 2026, with 1.28M active FSD subscriptions up 51% year over year.
CEO Jensen Huang’s $40 trillion total addressable market for humanoid robots has catalyzed Wall Street positioning around both companies as the physical AI thesis—where Nvidia supplies the compute platform and Tesla executes the pure-play humanoid robotics opportunity—becomes the dominant institutional narrative.
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Jensen Huang has spent the past year repeating one number that keeps growing louder: humanoid robots represent a $40 trillion total addressable market for labor automation. That figure came up again on the Animal Spirits Talk Your Book episode on investing in the rise of the robots, where guest Derek Yan argued the opportunity is "potentially bigger" than EVs or smartphones. I have owned NVIDIA for more than 15 years, and I have never heard the company's CEO put a number this large on a single end market.
Here is what I want you to walk away with: the physical AI thesis has two clean public-market expressions. NVIDIA sells the picks and shovels. Tesla is the pure-play humanoid bet. Wall Street is positioning around both, and the credibility bridge is already on the road.
Why the "sci-fi" objection no longer holds
Yan's framing on the podcast is that physical AI is digital AI given a body, and that autonomous driving is another application of physical AI: those cars are eventually autonomous robots. The Animal Spirits host described being blown away by his first Waymo ride. That experience is becoming common, and it is the proof point that the underlying perception, planning, and control stack actually works in the wild.
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Yan said on the podcast: "when like trillion-dollar company want it happen, it's very likely to happen." Huang at NVIDIA and Elon Musk at Tesla are personally directing billions of dollars at this. That capital flow is the institutional tell.
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NVIDIA: the compute layer under every humanoid
NVIDIA (NASDAQ:NVDA) is the platform vendor for physical AI. On the most recent call, Huang announced "Isaac Groot, N1, the world's first open fully customizable foundation model for humanoid robots" and noted that partners including Agility Robotics, Boston Dynamics, and XPENG Robotics are using Isaac simulation to train humanoids. Huang said: "Billions of robots, hundreds of millions of autonomous vehicles, and hundreds of thousands of robotic factories and warehouses will be developed."
The financials back the platform story. Q1 FY2027 revenue hit $81.61 billion, up 85.2% year over year, with Data Center at $75.25 billion per the company's 8-K filing. Shares are up 14% year to date and sit near $212.60. Analyst consensus target is $295.69 with 48 Buy and 10 Strong Buy ratings. Forward P/E sits at 24x, striking for a company growing data center at this clip.
Tesla: the only public pure-play humanoid bet at scale
Tesla (NASDAQ:TSLA) is building Optimus production lines designed for 1 million robots per year at Fremont and 10 million per year at Gigafactory Texas, with a Gen 3 unveil targeted for Q1 2026. The FSD business is the existence proof: 1.28 million active FSD subscriptions, up 51% year over year, with Services revenue up 42% on a $22.39 billion top line.
The valuation is the catch. Tesla trades at a forward P/E of 208x with a TTM EPS of $1.10. Shares are down 2% year to date at $440.36, though the stock has rallied 16% in the past month. Prediction markets are skeptical on near-term Optimus shipping timelines, pricing 14% probability of a Tesla Optimus release by December 31, 2026. You are paying today for a robotics ramp the crowd does not yet believe in.
What I am watching
If Huang's $40 trillion number is even directionally right, the math says NVIDIA collects rent on every humanoid trained, simulated, and deployed, while Tesla either delivers on Optimus and becomes something much larger than an automaker, or it does not and that 208x forward multiple compresses violently. The Waymo ride that surprised the Animal Spirits host is the same reason Coatue trimmed mega-cap tech in Q1 and Huang keeps repeating the trillion-dollar TAM number on stage. The picks-and-shovels case looks cleaner today. The pure-play case offers the bigger payoff if Gen 3 Optimus ships at the volumes Musk promised. Both bets live or die on the same thesis: physical AI is real, and the trillion-dollar companies want it to happen.
Don't wait: the analyst who called NVIDIA in 2010 just revealed his top 10 AI stocks. See the full list FREE now.
Source: “AOL Money”
