Humanoid robotics is quickly moving from science fiction to factory floor reality.
In the latest episode of Lead-Lag Live, Derek Yan, Senior Investment Strategist at KraneShares, joined us to discuss the commercialization of humanoid robots, the global competitive landscape, and how the KOID ETF is positioned within what could become one of the largest industrial transformations of the next several decades.
The conversation centered on a core question advisors are rightly asking: Is humanoid robotics just another overhyped theme — or are we at the beginning of something structurally different?
From Narrative to Deployment
Advisors have reason to be cautious. Clean energy peaked in 2021. The metaverse narrative surged in 2022 before fading. Thematic ETFs often arrive at moments of peak enthusiasm.
Derek made the case that humanoids are different — because deployment is already underway.
Major enterprises are actively testing and integrating humanoid robots into real-world operations. Automotive factories, logistics hubs, and industrial facilities are experimenting with embodied AI systems capable of performing repetitive physical tasks.
Unlike the metaverse — which required consumer behavioral change — humanoids address a structural problem: labor shortages.
Factories and enterprises have faced persistent workforce constraints for decades. If humanoids can operate at 98% efficiency today, businesses are simply waiting for incremental performance gains before mass rollout.
The key shift is this:
This is no longer theoretical AI. It’s physical AI.
When AI moves from screens into machines that perceive, decide, and act in the real world, the economic impact becomes tangible.
The Ecosystem Matters More Than the Brand
One of the most important distinctions Derek emphasized was ecosystem exposure.
Many portfolios already hold Nvidia and Tesla. Those companies participate in the humanoid theme — Nvidia on the “brain” side (AI models, semiconductors) and Tesla through Optimus development.
However, humanoid robotics is far broader than two mega-cap names.
The ecosystem includes:
AI and semiconductor companies (the “brain”)
Sensors and actuators (the “body”)
Precision gears such as harmonic drives
Rare earth materials
Systems integrators assembling and deploying robots
Global manufacturers driving cost efficiency
In a market-cap-weighted approach, trillion-dollar AI names dominate exposure. An equal-weight methodology instead spreads allocation across the entire value chain.
That matters because:
The eventual winners among humanoid brands are uncertain.
Pick-and-shovel suppliers may prove more durable than headline robot manufacturers.
Global supply chains are fragmented across regions.
Owning only Nvidia or Tesla captures part of the story. Owning the ecosystem captures the structural shift.
The China Question
No discussion of robotics is complete without addressing China.
Humanoid robotics is shaping up to be a dual-pole race between the U.S. and China. The U.S. leads in AI models and advanced semiconductors. China leads in cost-efficient manufacturing and robotics production scale.
Derek argued that ignoring China may actually be the greater risk.
China represents one of the largest potential deployment markets globally. Several humanoid-focused companies are listing in Hong Kong or mainland exchanges rather than as U.S. ADRs, reducing certain delisting risks.
He compared the situation to clean tech years ago. Investors who excluded China missed a significant portion of the supply chain expansion.
For advisors concerned about geopolitical volatility, sizing matters. A 3–5% thematic allocation within a diversified portfolio keeps exposure manageable while capturing participation in what could be a multi-decade structural shift.
Are the Forecasts Realistic?
Projections from major institutions estimate trillions in potential revenue and even the possibility of billions of humanoid units by 2050.
Derek encouraged viewing those projections directionally rather than literally.
The critical takeaway is not whether the industry becomes $3 trillion or $8 trillion. The takeaway is that the market effectively does not exist today.
An industry growing from zero to even a fraction of those estimates would rival the size of major global industrial sectors.
The real question is not “Will it hit exactly $5 trillion?”
The real question is:
What happens to companies positioned across the value chain if even a conservative version of this thesis materializes?
Portfolio Construction: Core or Satellite?
Derek framed KOID as flexible in portfolio construction depending on conviction.
For exploratory investors, a 1–2% satellite allocation provides exposure without material portfolio impact.
For advisors already holding robotics or industrial automation ETFs focused on traditional robotic arms and factory automation, KOID could serve as a 3–5% allocation — potentially replacing legacy robotics exposure with embodied AI exposure.
The argument is that traditional industrial automation is mature. Humanoids represent the next growth leg in physical automation.
This is not simply robotics 2.0. It is robotics combined with foundation models and real-time AI decision-making.
Milestones to Watch
What tells us the thesis is accelerating versus stalling?
Derek highlighted several concrete markers:
Bullish Milestones
Thousands or tens of thousands of units delivered annually
Public announcements of mass deployment in factories or logistics
Clear ROI metrics from enterprise users
Expansion from pilot testing to scaled production
If companies begin delivering in volume, it signals economics are working — not just engineering demos.
Warning Signs
Regulatory setbacks following safety incidents
Deployment delays due to liability or insurance challenges
Slower-than-expected enterprise adoption
Derek compared this to autonomous driving: technology may be ready, but regulatory frameworks take time to catch up.
The path will not be linear. There will likely be volatility, pauses, and setbacks.
That does not negate the structural trend.
Hype vs. Reality
The defining distinction in this conversation was simple:
The hype cycle focuses on headlines.
Deployment focuses on unit deliveries.
Right now, humanoid robotics is crossing that line from narrative to operational testing.
Once businesses begin ordering in scale, the conversation changes from “Can this work?” to “How fast can we deploy?”
That is when industries transform.
Final Thought
Investing in humanoids today resembles investing in early-stage AI infrastructure before widespread enterprise adoption.
The timing question remains valid. Adoption curves are difficult to forecast. Regulatory friction is inevitable. Competition is intense.
However, the economic incentive is powerful:
Structural labor shortages
Manufacturing cost pressure
AI models improving rapidly
Governments supporting industrial competitiveness
Humanoid robotics sits at the intersection of all four.
For advisors, the question is not whether humanoids will exist.
The question is whether portfolios are positioned for the physical deployment of AI — not just the digital version.
If the next phase of AI is embodied, then the allocation conversation changes.
And that is where this theme moves from hype to deployment.
The Lead-Lag Report is provided by Lead-Lag Publishing, LLC. All opinions and views mentioned in this report constitute our judgments as of the date of writing and are subject to change at any time. Information within this material is not intended to be used as a primary basis for investment decisions and should also not be construed as advice meeting the particular investment needs of any individual investor. Trading signals produced by the Lead-Lag Report are independent of other services provided by Lead-Lag Publishing, LLC or its affiliates, and positioning of accounts under their management may differ. Please remember that investing involves risk, including loss of principal, and past performance may not be indicative of future results. Lead-Lag Publishing, LLC, its members, officers, directors and employees expressly disclaim all liability in respect to actions taken based on any or all of the information on this writing.
