Tesla Wants to Build 10 Million Robots a Year. Here Are the Supply Chain That Needs to Exist First and the Stocks Set to Benefit.
Key Points
Tesla is aiming to build millions of humanoid robots every year.
Mechanical supply chain companies like Amphenol and Moog could benefit.
Computer chip makers are set to sell into this market as well.
Elon Musk is anything if not ambitious. The leader of Tesla (NASDAQ: TSLA) believes the company can produce 10 million humanoid robots, called Optimus, at its Texas factories. Today, the product is just a prototype, but Tesla wants to sell it to customers for around $25,000 apiece because of the immense value an advanced humanoid could have in everyday life, not to mention commercial and industrial use cases worldwide.
While Tesla would clearly benefit if it could generate tens of billions in annual revenue from Optimus sales, there may also be hidden champions in the humanoid supply chain that would benefit. Here are some stocks that could be massive winners from the growth of Optimus production in the years ahead.
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Tesla's massive ambitions
A humanoid robot like Optimus could be used for many tasks, including household chores, construction, farming, and other work that could replace manual labor. The technology is still being perfected. If it can be made feasible, Optimus could have immense value worldwide, especially in commercial and industrial use cases.
Tesla aims to increase its production of Optimus humanoids in Texas to 10 million sometime in the near future, although an exact date has not been set. At a cost of $25,000 per robot, that would equate to $250 billion in annual sales, which is larger than Tesla's automotive business today.
Image source: Getty Images.
Industrial beneficiaries
Humanoids will be expensive because of the complex machinery and electronics packed into them to enable clear vision and precise motion control. Many industrial players will be selling into the humanoid supply chain.
One potential winner is Moog (NYSE: MOGA). The company is a longtime supplier of precision actuators, mechanical controls, and electronic systems for aircraft (including in space), which should be helpful for the precise controls needed in the humanoid robot market. Moog has been a steady grower, with revenue up 847% cumulatively in the 21st century. This figure could accelerate if the humanoid robot market takes off.
Another industrial winner could be Amphenol (NYSE: APH). It is a player similar to Moog, but it operates in the sensor, interconnector, and cable market, which has been booming due to the artificial intelligence (AI) infrastructure build-out. Humanoid robots will need many connectors and sensors to work properly, making it a promising growth market for a company that saw 30% organic growth last quarter, reaching $8.8 billion.
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Don't forget computing power
Like other advanced hardware systems, humanoids will require computer chips and rely on cloud computing data centers to operate their AI systems.
This makes existing AI infrastructure players, such as Nvidia and Taiwan Semiconductor Manufacturing, potential beneficiaries of the humanoid robot revolution. However, these stocks already have premium valuations.
One potential hidden gem poised to benefit from the growth of robotics is Texas Instruments (NASDAQ: TXN). It sells a wide range of basic computer chips used across humanoid robotics, much like it operates in the modern automotive supply chain.
Last quarter, Texas Instruments' revenue grew 23% year over year to $5.46 billion. It trades at a price-to-earnings ratio (P/E) of 44, but it may be on the cusp of a decade-long run of growth that will make it a great stock to buy and hold for the long term. Plus, it is a nice dividend growth story, with the dividend per share up 184% in the last 10 years.
If you want to play the humanoid robot market, there may be much better buys out there than Tesla. Moog and Amphenol will sell mechanical parts to all these players, while Texas Instruments will be the computing backbone for these robots.
Brett Schafer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amphenol, Tesla, and Texas Instruments. The Motley Fool recommends Moog. The Motley Fool has a disclosure policy.