Physical AI is accelerating toward an industrialization inflection point, and J.P. Morgan raises shipment forecasts for humanoid and industrial robots

Overview

This report focuses on the robotics and factory automation sector, updating shipment forecasts for global humanoid robots and Chinese industrial robots, while highlighting the investment opportunities in Leader Harmonious Drive System Co. and Estun Automation-A. The report argues that the industry is at a multi-layered inflection point: humanoid robot hardware capabilities are improving rapidly, while industrial robots are being driven by demand from AI servers, auto parts, lithium batteries, and overseas capacity expansion, with policy and capital also pushing a re-rating across the supply chain.

Core views

The core view is that Physical AI has not yet reached its true "ChatGPT moment," but generational progress has already emerged in the robot "body" layer in terms of mobility, dexterity, stability, and cost reduction. Chinese OEMs and component supply chains lead in scaling, manufacturing readiness, and commercial deployment, making hardware and high-quality component makers more visible in terms of near-term earnings. The report favors leading companies with scale, customer resources, earnings recovery, and market share gains, especially Leader Drive and Estun, while also mentioning related names such as Inovance, Yiheda, Hengli Hydraulic, Sanhua Intelligent, and UBTech.

Analysis framework

The analysis uses bottom-up channel checks, interviews with OEMs and component suppliers, high-frequency order data, observations of policy and capital flows, and a long-term penetration framework. Short-term forecasts focus on orders, capacity, customer onboarding, and application scenario expansion in 2026-2027E; long-term forecasts incorporate labor shortages, analogies to NEV and smartphone penetration curves, and stages of physical intelligence development.

Methodology notes

• Industry shipment forecastingBottom-up channel research

  Use OEMs, component suppliers, distribution channels, and high-frequency order data to validate short-term shipment trends.

  The report uses channel checks to support upward revisions to humanoid robot and industrial robot shipments in 2026-2027E, and cites a 28% YoY increase in China's industrial robot production in 5M26 as evidence of order momentum.

• Technology maturity frameworkS1-S5 Physical AI development stages

  Drawing on autonomous driving classification, Physical AI progresses from structured single-task capability to cross-scenario, cross-task generalization.

  The report believes the industry is currently roughly at the S1 stage, could reach S2 by 2027E, and S3 by 2029E; intelligence, data quality, and sim-to-real transfer remain the main bottlenecks.

• Valuation methodologyDCF and P/E valuation

  DCF valuation is used for Leader Drive, with reference to FY27E P/E multiples.

  Leader Drive's Jun-27 target price of Rmb481 implies about 222x FY27E P/E, assuming WACC of 8.7% and a perpetual growth rate of 6.5%; Estun's target price of Rmb50 uses a 120x P/E multiple.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Leader Harmonious Drive System Co. / 688017 CH

  Core supplier of harmonic reducers for humanoid and industrial robots, benefiting from growth in the hardware supply chain.

  Strengths

  Has scaled harmonic reducer capabilities, with customers covering multiple OEMs in and outside China; expanding overseas through a joint venture with Minth, with a U.S. factory under construction; the report expects a sales CAGR of about 50% in FY26-28E.

  Weaknesses

  Valuation is high, the share price has already risen about 99% year to date, and capacity bottlenecks are shifting from equipment to labor and process flow.

  Comparison

  The report views it as one of the few harmonic reducer suppliers globally capable of scaling, with reference to Japan's Harmonic Drive System.

  Risks

  Intensifying price competition, gross margin delivery below expectations, changes in customer order timing, and execution risk in overseas expansion.

• Estun Automation-A / 002747 CH

  A leading Chinese industrial robot and automation company, benefiting from AI-related demand and recovering lithium battery and energy storage orders.

  Strengths

  1Q26 gross margin increased 2.1 percentage points YoY to above 30%, orders have grown more than 20% YoY since April, and the report expects net margin to reach 5% in 2026E.

  Weaknesses

  Valuation corresponds to a high P/E multiple, and earnings recovery still requires ongoing validation through orders and cost control.

  Comparison

  The report believes it stands out in China's factory automation and robotics sector, with the share price up about 31% over the past month.

  Risks

  Raw material cost inflation, industrial demand below expectations, and weaker-than-expected gains in high-end market share.

• Unitree

  A potential IPO candidate that could become a valuation anchor for China's humanoid robot sector.

  Strengths

  1Q26 sales grew 68.5% YoY, cumulative humanoid robot shipments reached about 11k units as of May 2026, and the 2026E humanoid robot target is 10-20k units.

  Weaknesses

  Post-listing valuation may be high, potentially intensifying market scrutiny of earnings visibility and mass-production capability.

  Comparison

  Its post-money valuation is about Rmb100B, or about 35x FY26E P/S, placing it at the high end of global comparables.

  Risks

  IPO progress, secondary market risk appetite, and validation of its business model and scaled profitability.

• Tesla Optimus

  One of the few humanoid robot projects globally with a clearly defined mass-production expansion plan.

  Strengths

  Construction of the Optimus factory near Giga Texas is progressing, and China's supply chain indicates capacity could ramp meaningfully in 2H26E.

  Weaknesses

  Public disclosure remains cautious, early applications may be limited to simple factory tasks, and generalized capability still needs time.

  Comparison

  Compared with Chinese OEMs, Tesla has advantages in global branding, software, and scenario closed-loop, but the pace of supply chain mass production still needs validation.

  Risks

  Technology maturity, IP protection limiting disclosure, cost curve, and slower-than-expected expansion of actual application scope.

Key data

• 2030E global humanoid robot shipmentsAbout 1.75 million unitsThe report's base-case scenario expects a shipment CAGR of about 150% in 2025-2030E.
• China's contribution to global humanoid robot shipmentsAbout 50% in 2030E; over 80% in 2025EInitially driven by manufacturing supply chain readiness and government-supported real-world deployment.
• Forecast growth in China industrial robot shipments2026E +20%, 2027E +15%, 2028E +12%The 2026E forecast is above MIR's 12% industry forecast.
• Near-term humanoid robot shipments in ChinaAbout 20,000 units in 2025E, more than 50,000-80,000 units in 2026EGovernment-supported data collection centers are a key source of demand.
• China data center investment planAbout Rmb2T over the next five yearsSupports AI and emerging technologies, with at least 80% of technology expected to rely on domestic suppliers.
• Tesla Optimus production rampFrom about 100 units/week in May/June 2026 to more than 1,000 units/week in 2H26ESupply chain checks in China indicate Tesla is preparing for mass production.
• Unitree valuation and shipmentsConsensus post-money valuation of about Rmb100B; cumulative humanoid robot shipments of about 11k units as of May 2026Its IPO could become a valuation anchor for the sector and affect capital flows.
• Leader Drive target price changeRaised from Rmb264 to Rmb481Current price Rmb383.18, rating maintained at Overweight.
• Estun target price changeRaised from Rmb28 to Rmb50Current price Rmb37.62, rating maintained at Overweight.

Impact & implications

The investment implication of the report is that the robotics supply chain is shifting from thematic trading to a phase of validation through orders, capacity, and earnings. Capital may continue to concentrate in scaled platforms, high-quality components, and leaders with AI or software capabilities; smaller OEMs and new entrants face higher financing hurdles due to training data, manufacturing ramp-up, and capex pressure. If Unitree's IPO is completed smoothly, it could provide a new valuation anchor for Chinese humanoid robot companies and may also trigger capital reallocation among existing names.

Risks

• Humanoid robot intelligence remains constrained by high-quality scenario data, VLA models, world models, and sim-to-real transfer.
• Sector valuations have already been significantly re-rated; if orders, capacity, or margins fall short of expectations, leading stocks may correct.
• Price competition and raw material cost inflation may compress gross margins for component and factory automation companies.
• IPOs such as Unitree may provide a valuation anchor, but could also trigger capital rotation and short-term selling pressure in existing names.
• Geopolitics, overseas supply chain build-out, and the pace of AI chip and data center investment deployment may affect industry expansion.

What to watch

• Unitree IPO progress, pricing, and its post-listing capital impact on existing names such as UBTech and Leader Drive.
• Whether real-world humanoid robot training programs in China can achieve more than 100 high-value scenarios and deployments at the scale of tens of thousands of units.
• Whether Tesla Optimus can ramp from about 100 units/week to more than 1,000 units/week in 2H26E.
• Leader Drive's capacity expansion, customer order delivery, price discounts, and gross margin stability.
• Estun's order growth, net margin recovery, and gains in high-end market share.
• Whether China's strong 5M26 industrial robot growth can continue through full-year 2026 and support the forecast of 20% YoY shipment growth.