Summary of Key Points
Embodied intelligence (in simple terms, intelligent robots that can perceive and act like humans) has evolved from an early-stage concept to a confirmed trillion-dollar market opportunity. By 2026, the Chinese market is expected to exceed one trillion yuan in size, with a global compound annual growth rate of 73% over the past decade. Core components such as motors and servo systems are crucial determinants of robot performance, and the industry has entered a phase where leading companies are seeing increased orders and profits. The investment logic has changed: traditional methods based on price-earnings ratios are no longer effective; long-term industrial upgrades should be the focus. In the secondary market, it is more promising to invest in smaller, high-quality companies that produce these core components rather than large robot manufacturers. To succeed, companies need to engage in end-to-end research and development and integrate software and hardware. Companies like Buko Co., Ltd. are already taking the lead in this area, but they still face challenges in terms of technological advancement, such as the need for smaller, higher-power-density hardware.
1. The Market’s Explosive Growth: From a Hypothetical Concept to a Real-Trillion-Dollar Industry
Previously, embodied intelligence might have seemed like something out of science fiction movies, but now it has become a profitable reality. According to authoritative data, the Chinese market will be close to one trillion yuan in 2025 (915 billion yuan) and will definitely exceed this figure in 2026, with an impressive global growth rate of 73%. Why is this not just hype? In the first quarter of 2025, leading domestic and international robot companies saw a surge in orders and profits—some received numerous orders for factory automation robots, while others had successful sales of medical robots. This indicates that the industry is indeed generating real revenue, rather than just being talk.
2. Core Components: The Heart and Joints of Robots
Whether a robot can perform tasks accurately and stably depends entirely on its core components. Just as humans rely on their heart for blood supply and joints for movement, robots’ “heart” is the motor (e.g., frameless torque motors), which provides power, while the “joints” are servo systems and modular actuators that control precision of movements. These components were once considered secondary, but now they have become critical bottlenecks. If China can produce these components domestically, it will reduce costs and ensure stable supply, thereby increasing profits.
3. Changing Investment Logic: Focus on Long-Term Industrial Upgrades
The traditional approach of evaluating tech stocks using price-earnings ratios (revenue divided by stock price) is no longer effective for embodied intelligence. This industry represents a major technological leap that will last for decades, similar to the smartphone revolution. Early companies may not be profitable, but they hold great potential for future growth. Another misconception in the secondary market is the focus on large robot manufacturers; many of these companies simply purchase components for assembly, with low technical barriers. The real opportunities lie with upstream companies specializing in high-value, niche components such as planetary ball screws, dexterous hands, and brushless motors. These areas have high entry barriers, less competition, and significant differences between stock prices and actual value, making them attractive investments.
4. How to Succeed: End-to-End Research and Development + Software-Hardware Integration
Companies that only assemble components will struggle in the long run due to rising supply chain costs and technological constraints. Success requires comprehensive R&D, covering all aspects from core components to software algorithms. Buko Co., Ltd.’s strategy of focusing on both “core components” (motors, servo systems) and “solutions for various applications” (industrial, medical, etc.) is a smart approach. They are also working on “distributed intelligent control,” where algorithms are directly integrated into motors and actuators for faster and more precise responses. However, the industry still faces challenges, such as the need for more compact, lightweight hardware with higher power capabilities, as well as the development of digital twin models to simulate real robots.
5. Industry Consensus: Hardware Alone Is Not Enough; Integration Is Key
Companies that only produce hardware are entering a competitive “red ocean” where prices are declining and profits are shrinking. High-quality companies recognize the importance of integrating hardware with software and digital technologies. For example, Buko Co., Ltd. integrates algorithm software into their modular actuators and opens up interfaces for AI upgrades, adding value to their products and making them harder for competitors to imitate. This integration creates a sustainable competitive advantage.
In summary, embodied intelligence is a major trend for the next decade, but not everyone will benefit from it. The key to understanding this market lies in focusing on core components, end-to-end R&D, and software-hardware integration. Investors should seek out companies with genuine technology and deep expertise in these areas rather than blindly following trends.