Over 500 million years ago, life on Earth underwent a dramatic transformation. Over a geologically brief period, the diversity of complex organisms exploded from simple, soft-bodied creatures into nearly every biological creature we know today. Scientists call this the Cambrian Explosion. The catalyst? A convergence of environmental, genetic, and ecological factors suddenly made rapid diversification not just possible, but inevitable. We are witnessing something remarkably similar in robotics and automation today.
The Cambrian period saw the emergence of eyes, limbs, and complex nervous systems in parallel across multiple lineages. Similarly, the robotics industry is experiencing a simultaneous evolution of hardware capabilities, software intelligence, and system-level coordination. Dexterous hands, new form factors, better edge AI models, and improved simulation environments are all converging at once. The total addressable market for robotics is expanding in lockstep with AI advancements, with new categories of tasks that machines can and will perform.
The Convergence: Why the TAM is Expanding
The parallel to biological evolution runs deeper than mere metaphor. In the Cambrian period, the development of eyes triggered an evolutionary arms race that accelerated innovation across entire ecosystems. Similarly, advances in AI are reshaping the entire landscape of what automation can address.
At the task level, we are seeing hardware improvements like dexterous manipulation, improved sensors, and new mobility form factors enable robots to perform work that was previously impossible. At the system level, better orchestration through AI allows fleets of robots, drones, and automated systems to coordinate in ways that multiply their collective impact. Coding agents and reasoning models are acting as force multipliers for development teams. Longer context windows and improved inference allow AI systems to handle more complex, longer-duration tasks with higher reliability.
This results in a fundamental expansion of the addressable market. Robotics is no longer confined to structured factory floors. It is moving into warehouses, homes, airspace, and infrastructure. And as AI continues to improve, the boundary of what robots can do will keep pushing outward.
2025: The Year Robotics Found Its Footing
The ROBO Global Robotics and Automation Index (ROBO), long considered the benchmark for the robotics industry since its launch as the world’s first strategy tracking the space in 2013, posted 24% annual performance for 2025. It’s climbing towards previous highs but at much more muted valuations, still, as both earnings and sales growth have outpaced valuations for the space. More importantly, the robotics market exited 2025 with real velocity. That came after a multi-year flat-to-down cycle with revenue growth, profitability, and industry excitement all improving simultaneously, benefiting from strengthening end markets and renewed capital expenditure cycles.
2026 Outlook: Physical AI Takes Center Stage
At risk of sounding like a broken record, we believe physical AI is poised to take off in 2026.
The benefits of increased automation extend well beyond industrial productivity, though we often fail to discuss them. At home, AI agents are beginning to handle the small stuff that eats our days: managing calendars, clearing digital clutter, automating repetitive tasks. We have not yet fully experienced the deflationary effects of automated production and movement of goods, whether on the ground or in the skies. Drones, for example, are increasingly used not just for monitoring and improving operations, but for handling tasks themselves.
Robotics is also expected to become a central focus for national security. The United States is anticipated to introduce a National Robotics Strategy, recognizing that leadership in automation is as strategically important as leadership in semiconductors or AI.
And with every technological leap comes new challenges and threats. As drones proliferate across delivery, personal use, and infrastructure monitoring, we are simultaneously seeing them deployed in conflict zones like Ukraine. Both “good and bad agents” use them for functional operations as well as offence and defense applications. Increased autonomy demands increased protection using similar, if not more advanced technologies.
New ROBO Addition Spotlight: Ondas, Inc.
The reasons discussed above, along with fundamental analysis of technology and market leadership, led to the addition of Ondas, Inc. to the ROBO Global Robotics and Automation Index (ROBO) at the Q4 2025 rebalance. Recently rebranded from Ondas Holdings, the company is a diversified autonomous systems player spanning air, ground, and communications. Its applications range from railroad monitoring to counter-UAV defense to weapons demining operations. It has demonstrated vision and disciplined execution through strategic M&A, including the Roboteam acquisition that expanded its ground robotics capabilities in conflict zones and beyond.
Major catalysts lie ahead as the industry sees massive growth and investment globally: World Cup and Olympics security, airport and stadium protection, government facilities and beyond. Most recently in 2026, post index addition, Ondas, Inc. landed a multi-year autonomous border protection contract for the Israeli border.
Ondas represents a prime example of new modalities becoming the tip of the spear for the next wave of automation investment, spanning key underlying technologies across actuation and computer vision to industrial manufacturing and diverse real-world applications.
Looking Ahead
As we enter 2026, AI infrastructure spending should remain robust while physical AI and edge deployments open new growth vectors beyond the datacenter. Reshoring and industrial focus are returning in force. Companies operating at the intersection of physics and intelligence will excel in the economics of physics, which is all about pushing the boundaries of what can be built, moved, and transformed in the physical world. The Cambrian Explosion created entirely new ways of existing. The same will be true for the explosion of robotics and AI.
For more on robotics and AI, join our upcoming webcast on February 10 at 11 a.m. ET, “From Digital to Physical: AI’s Move into the Real World.” Register here.
ROBO is the underlying index for the ROBO Global Robotics & Automation ETF (ROBO), the L&G ROBO Global Robotics and Automation UCITS ETF (ROBO.LN), and the Global X ROBO Global Robotics & Automation ETF (ROBO.AU).
Looking for regular updates? Subscribe here for weekly insights on robotics, AI, and healthcare technology, delivered straight to your inbox.
For more news, information, and analysis, visit our Disruptive Technology Content Hub.
vettafi.com is owned by VettaFi LLC (“VettaFi”). VettaFi is the index provider for the ROBO ETFs, for which it receives an index licensing fee. However, the ROBO ETFs are not issued, sponsored, endorsed, or sold by VettaFi. VettaFi and its affiliates have no obligation or liability in connection with the issuance, administration, marketing, or trading of the ROBO ETFs.
