Published : 17 Dec 2025
The physical AI market was valued at USD 5,132.4 million in 2025 and is anticipated to reach around USD 83,642.5 million by 2035, indicating a robust CAGR of 34.4%. The growth of physical AI market is being fueled by rapidly growing capabilities for embodied intelligence, edge-AI processing, and future generation robotic perception systems. Across global industries there is a strong trend toward increasing automation in response to labour shortages, safety issues, and the need to achieve greater operational efficiency. Advances in technologies such as computer vision, sensor fusion, reinforcement learning, and adaptive control have made it possible for robots to make decisions in real-time and operate independently in complicated settings and resulting in advances for the physical AI market. Significant opportunities exist for the manufacturers of robots and their associated platforms as industries such as manufacturing, logistics, and healthcare accelerate towards hyper-automation.
A significant development in the physical AI marketplace is the launch of Google deepmind's Gemini Robotics program, the first next-gen vision-language-action model built specifically for the unique requirements of real-world robotic applications. Gemini is capable of interpreting natural language commands within the context of its environment, accurately processing sensor input from various sources to build a dynamic model of the surrounding environment, and executing highly skilled manipulation tasks comparable to humans. Additionally, the introduction of these products marks a major advancement toward genuinely creating general-purpose physical AI. Through the development of these next-generation models and the increasing acceptance of robotics as a service (RaaS), the advances made in lightweight materials and the improvement of on-device AI Processing Technology, we have a clearer picture of an economically feasible, scalable ecosystem for continued growth of physical AI. Together, the three key trends transitioning through the technology development, deployed models and accelerated cross-industry adoption phases will lead to continue to provide support for the continued and sustained expansion of the physical AI commercial marketplace.
Advancements in Autonomous Perception & Real-Time Decision-Making
One of the biggest factors driving growth of the physical AI industry is the rapid advancements of autonomous perception technologies such as computer vision, multi-modal sensing, and reinforcement learning which enable robots and intelligent machines to understand and navigate their environment with human-like intelligence, With the help of these new technologies that the ability to make decisions in real time and collaborate seamlessly with humans creates safer environments where manufacturers, hospitals, retail organizations, and logistics centres all need systems that can dynamically adapt to changing environments. Additionally, physical AI will play a critical role in performing complex tasks, improving the efficiency of operations, and decreasing reliance on human labour for many organisations as the demand for autonomous intelligent systems continues to grow within both the manufacturing and services sectors.
Expansion of Robotics-as-a-Service (RaaS) & AI-Powered Automation Models
The rapid growth of robotics-as-a-service (RaaS) and subscription-based AI automation platforms is presenting a large opportunity for the physical AI industry. Many businesses are looking to automate processes without needing to make a large upfront investment in equipment. RaaS provides a more affordable way for companies to gain access to sophisticated robots powered by physical AI, which allows companies to scale their automation efforts much quicker than before to update AI models remotely and to use the robots for various applications from assisting with health care to fulfilling warehouse orders. The continued trend of increasing adoption of both cloud-based and edge-based AI will enhance the process of continual learning of robots to help businesses monitor their robots from a remote location and also help businesses optimise their fleets of robotic workers. As small and medium enterprises (SMEs) and companies in developing markets adopt this technology, RaaS offers an enormous opportunity for the physical AI industry to experience substantial growth.
The global market for physical AI has been segmented into component, deployment, technology, robot type, application, and region.
North America currently dominates the physical AI market due to its extensive robotics ecosystem within the region, high levels of AI adoption, and large amounts of investment from technology leaders such as Nvidia, Tesla, Boston Dynamics, Amazon Robotics, and Google Deepmind. Furthermore, North America benefits from a mature level of industrial automation, advanced healthcare robotics and extensive edge-AI technology deployment throughout manufacturing, logistics and defence. The regional leadership will be strengthened further with government initiatives to develop safer AI and develop autonomous systems and next-generation robotics. Additionally, the availability of top-tier research institutions and venture capital funding promotes the rapid commercialization and deployment of physical AI systems.
The Asia Pacific region is currently one of the fastest-growing physical AI markets due to rapid industrialization, expanding manufacturing capacity, and increasing levels of smart factory adoption in China, Japan, South Korea, and India. The Asia Pacific region is currently the leading region for volume robot production, semiconductor manufacturing, and low-cost hardware production, which enables the rapid deployment of AI-enabled robotic platforms. Government programs such as China's “Made in China 2025”, Japan’s Society 5.0, and South Korea’s national robotics initiatives have all increased investment in humanoids, service robots, industrial automation and healthcare AI. As a result, with rising labour costs, increased automation needs and a strong domestic manufacturing ecosystem, Asia Pacific is expected to surpass all other regions regarding the adoption of physical AI over the next decade.
| Parameter | Details |
| Size in 2025 | USD 3,137.5 Million |
| Forecast by 2035 | USD 83,642.5 Million |
| CAGR During 2026 - 2035 | 34.4% |
| Largest Component Segment (% Share 2025) | Hardware– 57.2% |
| Largest Region Size (2025) | North America – 40.4% |
| Fastest Growing Region (% CAGR) | Asia Pacific – 31% |
| Key Players Covered | SoftBank Robotics Group, Agility Robotics, Mech-Mind Robotics, Siemens, KUKA AG, Toyota Motor Corporation, FANUC, ABB, Boston Dynamics, Tesla, NVIDIA, and DeepMin. |
Contact:
Mr. Richard Johnson
Acumen Research and Consulting
India: +91 8983225533