The tech bigwigs and economists at the recent World Economic Forum (WEF) in Davos were clear-eyed about how AI is reshuffling the jobs landscape globally and disrupting national economies.

But the chatter around physical AI and robotics was more upbeat, with attendees saying robots with brains and intelligent sensors are likely to improve human productivity and manufacturing output. 

That, in turn, should improve economies — and in the long run create more jobs. 

Physical AI refers to the concept of AI manifesting in physical form, most notably as robots, though others foresee broader real-world outcomes, such as AI cameras that reduce crime or AI-driven sensors that bolster industrial output.

“You can now fuse your industrial capability, your manufacturing capability with artificial intelligence and that brings you into the world of physical AI or robotics,” said Jensen Huang, CEO of Nvidia, during a fireside chat at WEF.

If anything, AI — including agentic AI and robotic automation — is more likely to  change the nature of what humans do than take jobs away, he said. Robots can do menial work such as typical administrative tasks, allowing humans to be more productive, Huang said. “We’re five million nurses short…. AI is increasing their productivity…. [And when], hospitals do better, they hire more nurses.”

Robots have the capacity to work non-stop, without tiring, yielding productivity gains that will increase the average output of economies, said tech entrepreneur Elon Musk. “My prediction is…we’ll make so many robots and AI that they will saturate all human needs,” the Tesla CEO said during a WEF discussion.  

He described how robots might be able to help care for elderly parents, which can be an expensive undertaking for humans, saying the robots can take the place of younger people.

Robots are also capable of doing jobs considered dangerous for humans, though  humans will still need to be involved, Daniela Rus, director at MIT’s Computer Science and Artificial Intelligence Laboratory (CSAIL), said during a panel session at WEF. (Many companies have roots at CSAIL, including Venti Technologies, where Rus is a board member and adviser.)

Venti has “entire fleets of robots that operate 24/7 without the need of human drivers,” Rus said. “Yet human drivers are also in the loop to step in when the weather is bad or when there is a lot of need for movement.”

China is considered further ahead in robot adoption than the US, where the robotics market is still growing. Tianlan Shao, CEO of China-based Mech-Mind Robotics, said his company had delivered more than 10,000 robots in the past year — the same number it produced during its first eight years of existence.

He argued that if a industrial robot is given a chainsaw, for example, humans might still be needed to make sure the robot sticks to task. “We need clear boundaries…, definitions, and rules,” Shao said.

Shao pointed to progress in the last 12 months of fusing AI into robots. “Now we can train this so-called world-model-like thing, aligning everything, including robot vision and robot motion, aligning everything in one specific space.” 

World models under development by the likes of Nvidia, Microsoft ,and Google are designed to improve the physical functionality of robots.  Researchers at Mohamed bin Zayed University of Artificial Intelligence have created a world model called PAN that tests action sequences in a safe, controlled simulation.

The growing importance of physical AI has been acknowledged beyond just the WEF.  Deloitte’s State of AI in the Enterprise report, released in January, pointed to a widening adoption of physical AI. About 58% of companies surveyed by the consulting firm noted physical AI adoption, a figure expected to grow to 80% in the next two years.

The consulting firm sees physical AI as having a real-world component, meaning  technology that can sense and drive a physical outcome. Monitoring and security systems, for instance, are fast-growing areas for deployment, along with collaborative robotics.

“Physical AI as a terminology is relatively new, but the underlying foundation was laid 12 or 13 years ago — what’s different now is adding intelligence and autonomy on top of that physical foundation,” Beena Ammanath, global head at Deloitte AI Institute, told Computerworld.

The older underlying foundations of physical AI include IoT and robotic process automation, Ammanath said.

Despite the encouraging comments about physical AI, not everyone at WEF had rosy assessments for robotics. “Elon Musk also told us in 2017 that we will be falling asleep at the wheel in 2019,” Rus said, offering a cautionary note. “And we’re still not falling asleep at the wheel.”

The rise of humanoid robots will take time due to navigation, materials, dexterity and reasoning issues, Rus said. “It’s coming, but it’s not today,” he said.

WEF’s Chief Economists Outlook noted the growing value of companies that focus on humanoid robots — the mechanized machines that look like and function like humans and are a mainstay of science fiction.

“While far from general-purpose deployment on factory floors, humanoid robotics companies are attracting large valuations and investments,” the WEF said in its outlook for 2026.