Ten years ago, if someone told you that by 2025 artificial intelligence would be powering human-shaped robots, you might’ve thought we were finally living in a sci-fi dream. Now that it’s here, it turns out the real story isn’t just about fantasy it’s about a market on the verge of exponential growth.
The key difference today is that AI is finally useful in the real world. With the advancement of large language models and visual perception systems, robots now have a brain that justifies their battery life.
In other words, embodied AI the holy grail of robotics has left the lab and is starting to take its first commercial steps.
A Market on the Move According to Bank of America, global humanoid robot sales are expected to hit 1 million units per year by 2030, with 3 billion robots projected to be in service by 2060. Importantly, the vast majority 65% are expected to operate in domestic environments, while 32% support services like logistics and hospitality, and only 3% remain in traditional industrial roles.
This represents a clear shift: robots are moving up the value chain, from factory automation toward general-purpose home and service applications.
The economic tailwinds are clear. Cost is dropping fast. Today’s unit costs average around $35,000, but that’s expected to fall to $17,000 by 2030 closely tracking the pricing of China’s Unitree G1 robot unveiled at CES 2025. This rapid decline in cost sets the stage for mass adoption, particularly in the home.
Leaders in the Field The U.S. market is currently led by Boston Dynamics, Agility Robotics, and Tesla:
Boston Dynamics’ Atlas is already being tested by Hyundai for factory use.
Agility’s Digit is currently deployed at Amazon fulfillment centers.
Tesla’s Optimus, now in its third iteration, is being tested internally ahead of planned mass production in 2026.
Why This Matters Now We’re approaching an inflection point. AI advances are intersecting with breakthroughs in miniaturization, component affordability, and a growing labor gap, especially in aging societies like Japan. These forces are accelerating demand for automation not just in businesses, but at the personal level.
From an investment perspective, this is an opportunity to build a basket of names exposed to this emerging trend companies that currently have understated forward estimates due to cyclical biases. The reality is that very few forecasts today are pricing in what happens when humanoid robots move from novelty to necessity.
Looking Ahead Creating a humanoid robot that can truly serve as a general-purpose assistant is still about a decade away, requiring improvements in both AI models and mechanical hardware. But the path is clear. As costs fall and societal acceptance grows, this segment is likely to see one of the most dramatic transformations of the coming decade.
In short, the age of robots is no longer a question of if it's a question of when, and that when may be a lot sooner than most expect.
In 2024, the U.S. made up over 7% of the global industrial robotics market a sign that American manufacturing is quietly undergoing one of its most transformative shifts in decades. At the heart of this change is a growing reliance on advanced robotics, driven by demand for smarter, more flexible, and scalable production.
Much of this demand is coming from sectors like automotive, where the electric vehicle (EV) boom is reshaping how cars are built. High-volume EV production lines are now turning to automated robotic systems to meet scale, speed, and precision requirements. And that’s just the beginning.
Automation’s Next Chapter The fusion of AI and machine learning with industrial robotics is ushering in a new era—one where machines are not just performing tasks, but learning and adapting in real-time. Add 5G connectivity to the mix, and suddenly robots are communicating with near-zero latency, enabling tighter coordination and vastly improved efficiency across entire production lines.
All of this is accelerating the shift toward smart manufacturing. Across sectors—electronics, metals, heavy machinery—factories are evolving from static, linear assembly lines into agile, intelligent ecosystems. Robots are now handling everything from assembly and welding to cleanroom precision tasks, keeping plants running at peak capacity.
Capital Is Flowing In Investment continues to pour into this sector. The reasons are obvious: increased demand for electronics, cars, and infrastructure is putting pressure on manufacturers to scale up without sacrificing precision. Robotics especially industrial-grade platforms are proving to be the solution of choice.
And Yet… Why Humanoids? All of this brings us back to the bigger picture humanoid robots. Not everyone in the space is going to like this, but here’s the reality: we’re not betting on a future where humanoids become perfectly autonomous AGI-powered butlers. That’s a long game and we don’t need to wait for it.
Instead, we’re focused on the bridge, not the destination. A large part of the value will be created long before general-purpose humanoids exist in every home. In fact, humanoid robots don’t have to be fully autonomous to provide utility, drive productivity, or generate meaningful revenue.
Like the industrial sector, it’s the intermediate applications in logistics, warehousing, basic domestic support that are already creating investable opportunities. We believe this is where the next wave of winners will emerge.
Because while AGI may be years away, ubiquitous humanoid assistance is already within reach.
Despite major strides in embodied AI and growing mainstream buzz around humanoid robots, the robotics supply chain has yet to see a broad market re-rating. That’s not because of a lack of innovation. Instead, the drag comes from macro headwinds namely, the cyclical downturn in autos, the threat of fiscal tightening, and continued weakness in consumer electronics.
The Anatomy of a Robots And Its Risk Profile Robots are not simple machines. They are built from a complex ecosystem of components: precision motors and actuators for movement, semiconductors and computing power to enable AI, and sensors to interpret the physical world around them. All of these rely on global trade flows and are vulnerable to supply chain disruptions and geopolitical risk.
This makes robotics exposure a macro-sensitive investment, not unlike semiconductors or industrial machinery.
The China Factor Zooming out, there’s another dynamic that investors are watching closely: China controls 63% of the global humanoid robot supply chain, according to Morgan Stanley. That dominance is concentrated in “body” parts hardware components, actuators, sensors, and lithium-ion batteries. These aren’t optional pieces of the puzzle they’re essential.
That kind of concentration introduces both fragility and leverage. Trade tensions, export controls, or industrial policy changes can ripple through the entire robotics sector, especially as geopolitical rivalries sharpen.
What This Means for Investors Until these external risks stabilize—or until markets begin to price in robotics as a core secular growth theme rather than a cyclical derivative many of the supply chain names will remain under-owned.
But the moment that shifts, re-ratings could be swift and substantial particularly for companies sitting at the crossroads of AI, automation, and next-gen manufacturing
The Real Demand for Humanoids May Come From Jobs No One Wants to Do
When most people picture humanoid robots, they imagine them serving coffee or folding laundry at home but the real near-term demand lies elsewhere. Based on current technological capabilities, humanoids appear best suited for structured environments, particularly within manufacturing.
Think EV assembly lines, parts sorting, or repetitive industrial workflows. These are tasks that require precision but not creativity exactly the kind of work robots are beginning to excel at.
But the more intriguing opportunity lies in hazardous or high-risk jobs the kind of tasks that humans are either reluctant to do or shouldn't be doing in the first place. Mining operations, chemical exposure cleanup, disaster response, and certain military applications all come to mind.
Thanks to advances in AI, humanoids are becoming more adaptable to dynamic environments, making them uniquely suited for roles where safety, not speed or cost, is the top concern. It’s in these high-risk scenarios that customers are most likely to accept a premium price point for robots—because the alternative is exposing humans to danger.
Investment is ramping up to meet that demand. Across the U.S. and Asia, we’re seeing a surge in capital deployment into startups focused on humanoid robotics, while legacy companies are creating new robotics divisions to gain exposure to this trend. China, as always, is moving with intent providing early government support and leveraging its domestic supply chain advantages. The race is very much on.
Looking forward, the long-term projections are staggering. By 2050, analysts expect roughly 90% of humanoids around 930 million robots to be used for repetitive, simple, and structured work. That means most robots won’t be washing dishes in a suburban kitchen, but performing vital commercial and industrial tasks at scale.
China is expected to lead the world in deployment, with over 300 million humanoids in use by mid-century. The U.S. is forecasted to reach nearly 78 million, a notable upgrade from earlier estimates of 63 million.
This is the path to ubiquity not hype or sci-fi dreams, but filling the labor voids in places where humans either can’t or won’t go.
Humanoid robots have long sat at the intersection of aspiration and affordability. In 2024, a high-spec humanoid in a developed market cost around $200,000 a figure that has largely confined these machines to R&D labs, industrial pilots, and the PR videos of tech-forward automakers.
But now, the cost curve is starting to bend.
Downward Pressure on Price, Upward Pressure on Opportunity According to Morgan Stanley Research, average humanoid costs are expected to fall to $150,000 by 2028 and as low as $50,000 by 2050 in high-income markets. In developing economies that can lean more heavily on China’s vertically integrated supply chain, that number could drop to $15,000.
This shift has massive implications for adoption. By 2050, 15 million U.S. households could own a humanoid robot roughly 10% of the country.
Penetration rates would vary by income, from just 3% of households earning $50K–$75K annually, to one-third of households making over $200K. China, with its affordability edge, could still see a higher unit count overall, but a much smaller per-capita penetration.
The Real Levers Behind the Price Decline Traditional models have assumed a slow and linear cost decline but they may be too conservative. Historical data shows that robot prices dropped ~50% over the last decade without a hit to gross margins. The implication? Robotics companies have become proficient at driving cost efficiency without sacrificing profitability.
This time, a similar story is playing out.... only faster:
3D printing is reducing both the weight and material usage of key structural components, cutting costs up to 75%.
Advanced design optimization and shifts in manufacturing techniques (e.g., moving from electric discharge machining to cheaper mechanical machining for critical parts like T-screws) are accelerating the cost curve further.
The bill of materials (BOM) for high-spec humanoids has dropped from ~$250K in 2023 to around $150K today a 40% year-over-year decline, far steeper than previously modeled 15–20% annual reductions.
Hardware Bottlenecks And the Race to Solve Them Despite the progress, scaling remains bottlenecked by key components particularly linear actuators, where companies like Tesla are using high-precision planetary roller screws. But production is still limited:
High-precision grinding machines needed to produce these screws come almost exclusively from Japan and Europe, and exports are increasingly restricted.
Domestic manufacturers lack technical know-how, making them reliant on foreign players for now.
Manufacturing throughput remains slow, with some components taking over an hour per unit to produce.
China’s Quiet Domination in Humanoid Robotics
While headlines in the West focus on AI models and autonomous vehicles, a different story is playing out across the Pacific: China is rapidly outpacing the U.S. in the development and deployment of AI-enabled robotics humanoids included.
Unlike the U.S. market, where humanoids are being engineered for industrial, service, and eventually domestic utility with increasingly advanced specs, China is leaning into simpler, more scalable applications notably entertainment and education. These verticals require lower technological complexity, but provide high-volume use cases that help build domestic momentum.
Why China’s Ecosystem Is Pulling Ahead A few structural advantages are enabling China to take the lead:
Massive internal demand: China’s domestic market size allows for scale testing, iteration, and adoption that few countries can match.
Full-spectrum manufacturing control: The country has extended its global leadership in manufacturing to the robotics value chain. This includes everything from sensor production to actuator assembly.
Top-down policy alignment: National-level support for “embodied AI” is turning government attention and capital toward robotics. This is fostering deep tech clusters and accelerating startup formation.
As Sheng Zhong, Morgan Stanley’s Head of Industrials Research, recently put it:
“It is becoming apparent that national support for embodied AI may be far greater in China than in any other nation, driving continued innovation and capital formation. In our opinion, China's lead in AI-robotics may need to widen before rivals, including the U.S., pay closer attention.”
Closing the Precision Gap Historically, Chinese robotics manufacturers have lagged behind Western peers in component precision and control fidelity particularly in areas like linear actuation, force sensing, and AI integration.
But that’s beginning to change.
Chinese supply-chain players are actively working to close the performance gap through:
New design architectures tailored for agility and lightweight motion;
Refined manufacturing processes to enable tighter tolerances and repeatability
Next-gen materials that reduce friction and wear
On-device AI algorithms that allow more adaptive and precise behavior in real time.
These efforts are not just incremental. They’re part of a broad national push to control the full stack of embodied AI from the silicon to the software.
The Value Chain Behind Humanoid Robots: Who Stands to Win
While the U.S. has some front-runners in humanoid design think Tesla, Apptronik, and Figure China remains strategically positioned to dominate when these machines transition from R&D novelties to mass-market tools.
There are some leading U.S. players in humanoid design and development at this stage, but China could catch up when humanoids reach downstream application and mass production, riding on its strong self-sufficient supply chain.
That statement carries weight and concern.
Because while the U.S. may lead in humanoid architecture, vision, and control algorithms, hardware is where the real battle lies and where the U.S. is at a structural disadvantage.
The Hardware Dependency Problem Today, there are very few U.S.-based alternatives for many critical components used in humanoids:
High-precision planetary screws
Compact harmonic reducers
Lightweight but high-torque motors
Next-gen battery cells
Thermal and power management systems
Nearly every humanoid developer whether in North America, Europe, or Asia is reliant on Asia’s (and particularly China’s) manufacturing ecosystem to build, scale, and ship.
So while the Western players focus on intelligence and form, the foundational parts are still almost entirely made in China or its neighbors. This is not a short-term supply gap; it's a structural asymmetry.
Who’s in the Value Chain? If you’ve made it this far, chances are you’re not just interested in the narrative you’re looking for exposure. Let’s talk about where the value actually lies:
1. Core Component Manufacturers These are the companies building the essential parts—actuators, joints, batteries, screws, sensors—that power every humanoid:
Harmonic Drive Systems (Japan): High-precision motion control
Nabtesco (Japan): Compact reducers for robotic joints
Hengli Hydraulic (China): Precision roller screws
EVE Energy, CATL (China): Battery tech for mobile robotics
2. System Integrators These firms assemble the brain and body, integrating AI with hardware:
Tesla (USA): Optimus Gen 2 testing in Gigafactories
Agility Robotics (USA): Digit deployed in Amazon warehouses
UBTECH, Fourier Intelligence (China): Educational and service humanoids
3. AI & Perception Layer A critical layer where U.S. firms excel—language models, visual perception, spatial navigation:
NVIDIA: Omniverse for sim-to-real robotics training
Qualcomm: AI-on-the-edge processing chips
OpenAI, DeepMind, Boston Dynamics AI Institute
4. Enablers in the Background These are the companies powering development through simulation, cloud robotics, and compute:
Unity / Unreal Engine: Simulation and training environments
Amazon Web Services (AWS): Cloud robotics infrastructure
The Bottom Line Humanoids aren't just about flashy demos or general-purpose AGI. They represent a multi-decade hardware-software convergence story and investors who understand the value chain, not just the headline, will be better positioned to benefit.
In the short term, the U.S. leads in software. But hardware wins markets, and China’s grip on the physical components of humanoids gives it the kind of leverage the West currently lacks.
The smarter play? Don’t pick a single robot. Pick the supply chain.
If you’re still with us by now, it seems like you’re interested in the companies that will benefit from this theme.
So let’s unravel the value chain behind robots.
Company: ATS Corporation
Quote: $ATS
BT: $25- $30
ST: $48
Sharks Opinion:
ATS Corp has been quietly sitting on our watchlist for the last two years. We first started paying attention when EdgePoint a hedge fund we respect and follow closely began consistently increasing their position quarter after quarter. Despite that institutional confidence, the stock itself hasn’t done much during that time, which is partly why we haven’t traded it yet.
But with the robotics theme heating up and investor sentiment starting to shift, we think it’s worth revisiting. In fact, among all the public names in this sector, ATS might be our favorite.
From a fundamentals standpoint, ATS checks all the right boxes: steady revenue, established customers, and manageable debt levels. It’s not some pie-in-the-sky tech promise—it’s a real business with real cash flow.
The stock is thinly traded and sits in the mid-cap range, which likely explains why it hasn’t had its breakout moment yet. That might also present an opportunity.
Second, we see strong M&A potential. Given the increasing importance of robotics across multiple industries and ATS’s positioning in automation, it wouldn’t surprise us if a larger industrial player came knocking. This sector is ripe for consolidation, and ATS has the kind of balance sheet and product depth that could make it an attractive acquisition target.
Lastly and this may sound counterintuitive we actually like that it’s Canadian. Yes, there are plenty of publicly traded duds north of the border, especially in tech and cleantech, but every now and then you find a gem. ATS could be one of those underappreciated names that quietly delivers and gets rerated as the robotics narrative continues to build. Keep it on your radar.
Description: ATS Corporation, together with its subsidiaries, provides automation solutions worldwide. The company is involved in planning, designing, building, commissioning, and servicing automated manufacturing and assembly systems, including automation products and test solutions. It also offers pre-automation services comprising discovery and analysis, concept development, simulation, and total cost of ownership modelling; post-automation services, including training, process optimization, preventative maintenance, emergency and on-call support, spare parts, retooling, retrofits, and equipment relocation; and contract manufacturing services, as well as after sales and services.
ATS is a behind-the-scenes powerhouse in the robotics and automation world. As both a System Integrator and an Original Equipment Manufacturer (OEM), ATS plays a crucial role in automating the production lines of some of the world’s biggest companies. What sets it apart is its full-stack offering everything from pre-automation consulting to post-installation support.
At the front end, ATS works with clients to assess feasibility through concept design, simulations, and cost modeling. Once a project moves forward, ATS builds and integrates tailored automation systems using both proprietary and third-party components, while layering in software, engineering, and controls. And it doesn’t stop at delivery the company stays involved with training, process optimization, emergency repairs, spare parts, and even retooling or relocating equipment. This makes ATS more than just an automation vendor it’s a long-term automation partner.
Financially, the company continues to show solid operating performance. For the quarter ending March 31, 2025, ATS posted revenues of $721 million.
While it recorded a net loss of $68.9 million and a loss from operations of $113.6 million primarily driven by items related to a recent agreement its adjusted results paint a stronger picture. Adjusted net income came in at $40 million, adjusted earnings from operations reached $74.3 million (a 10.3% margin), and adjusted EBITDA totaled $97.1 million (13.5% margin). That kind of profitability in a capital-intensive sector speaks to how well-managed ATS is.
The company also posted $863 million in new order bookings during the quarter and now sits on a robust order backlog of $2.14 billion, providing solid visibility into future revenue.
All in, ATS is a vertically integrated automation play with strong financials, recurring revenue streams, and deep relationships in critical industries from pharma to nuclear. It's not flashy, but it’s the kind of quiet compounder that can surprise to the upside, especially as the broader robotics and automation trend gains momentum.
Over the past few years, ATS has quietly transformed its business through a series of strategic acquisitions most notably in the Life Sciences sector. Deals for Comecer, PA, and SP Industries have helped ATS carve out a dominant position, with Life Sciences now making up about 44% of total revenue.
The lion’s share of that roughly two-thirds comes from Medical Devices, with the remainder split between Pharmaceuticals, Chemicals, and Radiopharmaceuticals. This is a highly attractive space. The barriers to entry are significant, from regulatory requirements to technological sophistication, and customers are less price-sensitive. Instead, performance metrics like speed, precision, and consistency are what drive buying decisions. In a market like that, ATS’s vertically integrated automation offering gives it a serious edge.
ATS has also expanded into the Food & Beverage sector, starting with its acquisition of MARCO for $57 million in fiscal 2020, and then doubling down with the $260 million purchase of CFT in 2021. The company now plays a role in everything from produce inspection to beverage filling. With tightening food safety regulations and changing consumer preferences driving demand, this is a category with long-term tailwinds and relatively low automation penetration meaning lots of room to run.
Interestingly, ATS’s exposure to the Transportation sector has seen a complete evolution. Back in 2009, it accounted for 32% of the business, but by 2022 that figure had dropped to just 14%. Now it’s back up to 29% but this time, the growth is being driven by Electric Vehicles and aerospace, not internal combustion engines. ATS has already delivered over 70 EV battery assembly systems worldwide. Yes, the EV cycle has cooled off recently, and that’s partly why ATS stock has lagged. But we think the market is overcorrecting. ATS isn’t a fly-by-night EV startup it’s a picks-and-shovels play in battery assembly, which remains a secular growth story even if near-term demand is lumpy.
Energy and Consumer are currently smaller pieces of the pie, but both are long-duration growth stories. As ATS continues to diversify its segment exposure and execute on its end-market strategy, these categories could become more material contributors to revenue over time.
And underneath it all, the revenue streams break down even further by the nature of the work ATS performs everything from turnkey systems to retrofits and ongoing services. That blend gives ATS resilience, recurring revenue, and a strong foundation for long-term compounding.
RBC Capital Maintains Outperform on ATS, Lowers Price Target to C$48
Goldman Sachs Maintains Sell on ATS, Lowers Price Target to $30
JP Morgan Maintains Neutral on ATS, Lowers Price Target to $31
Company: Kraken Robotics Inc.
Quote: $PNG.V / $KRKNF
BT: $1.50 - $2.00
ST: $6-$8
Sharks Opinon:
Kraken Robotics is one of those under-the-radar names that popped up on our radar while digging through recent Anduril-related contracts. It's a Canadian-based marine tech company that’s quietly building some of the most advanced sonar and subsea power systems for unmanned underwater vehicles (UUVs), with end markets ranging from defense to offshore energy. Think of it similar to Coda Octopus if you remember that trade from the pandemic era but with even bigger upside potential if it plays out.
What started as a passion project for its founders has grown into a legitimate business with global operations in the U.S., UK, Germany, Brazil, and Denmark. Kraken is now positioned at the intersection of several key themes: underwater autonomy, energy resilience, and geopolitical instability in contested waters.
Its tech is specialized, and that’s exactly what makes it valuable right now. Kraken’s SeaPower batteries are seeing massive demand so much so that Anduril is building out a plant that could alone represent $600 million in annual demand, not even counting their larger Ghost Shark autonomous systems. The supply-demand imbalance works heavily in Kraken’s favor, and the company has the capital to scale.
On the financial side, margins are extremely healthy gross margins north of 60% and EBITDA margins above 20% which is rare for a company this small. It’s not exactly cheap at current prices, but we think the US$1.50 (CAD$2.25) zone is attractive for a first tranche, especially for those looking to bet on the growth of underwater defense systems.
This is a high-risk, high-reward name thinly traded, speculative, but potentially explosive if UUV demand continues to surge and Kraken executes. Definitely one to watch if you’re comfortable riding volatility with conviction.
Description: Kraken Robotics Inc., a marine technology company, engages in the design, manufacture, and sale of sonar and optical sensors, batteries, and underwater robotic equipment for unmanned underwater vehicles used in military and commercial applications in Canada, the Asia Pacific, Europe, the Middle East, Africa, North America, and internationally. It operates in two segments, Products, and Services. The company offers AquaPix miniature interferometric synthetic aperture sonar (MINSAS), a configurable MINSAS; and SeaPower, a pressure tolerant deep sea batteries.
Kraken Robotics has matured into a multi-segment business with a growing moat. Its operations can now be clearly divided across four main verticals: robotic hardware, component hardware (like synthetic aperture sonar systems), batteries, and services including recurring models like Robotics-as-a-Service (RaaS) and Data-as-a-Service (DAaaS).
This diversification not only reduces reliance on any one product but also creates layered revenue streams that compound over time.
Let’s talk growth. The global underwater robotics market is projected to grow at a compound annual rate of 14.59% between 2024 and 2032, eventually reaching $13.6 billion. That alone paints a bullish macro backdrop but Kraken’s positioning within that growth story is particularly compelling thanks to its tight integration with one of the defense industry’s fastest-growing companies: Anduril.
Anduril is currently building an AUV (Autonomous Underwater Vehicle) production plant where each unit is expected to carry approximately $3 million worth of Kraken hardware—$2.5 million in SeaPower batteries and $500K in sensors and software. At full production, this plant could represent a $600 million annual revenue opportunity for Kraken. And that’s just the baseline. The larger Ghost Shark AUVs, also built by Anduril, will reportedly house $8 million of Kraken gear per unit. These are meaningful numbers for a company Kraken’s size and they suggest a steep upward revenue curve as deployment ramps.
The company has already begun capturing this demand, securing a $34 million contract for its SeaPower pressure-tolerant batteries. And it's no coincidence that Kraken’s margins remain strong: its SeaPower line has no known competitor capable of matching its performance—operational depths of up to 6,000 meters at its energy density is still unmatched in the field. That’s a real technological moat.
On the product side, Kraken isn’t a one-trick pony. Their Katfish sonar system delivers high-resolution seabed imagery. AquaPix adds synthetic aperture sonar functionality in a miniaturized form. SeaVision enables advanced 3D laser imaging. And with the recent update to ALARS their autonomous launch and recovery system the company continues to innovate at a steady clip. They also offer complementary systems like the Sub-Bottom Imager (SBI) and Acoustic Corer (AC) for deeper geophysical profiling.
Finally, their services segment particularly RaaS gives Kraken recurring cash flow potential through survey and inspection services, rentals, and systems integration. This isn’t just a hardware play anymore; it’s becoming a hybrid tech-defense name with sticky, scalable revenue.
Bottom line: Kraken isn’t just building underwater tech—it’s quietly building a future-proof business. The market may still be sleeping on it, but the fundamentals and growth drivers are surfacing fast.
Kraken Robotics is on a solid balance sheet indicating both stability and agility. The company holds $58.5 million in cash, $18.7 million in receivables, over $19 million in inventory, and another $21.5 million in short-term assets. All of this sits against just $23.4 million in short-term liabilities, giving the company significant breathing room and flexibility as it scales operations.
The big catalyst behind this improved position was the $51.7 million capital raise Kraken executed in late October. While some investors may shy away from dilutive raises, in Kraken’s case it was a textbook example of well-timed financing—executed into strength, used to fortify the balance sheet, and done ahead of what appears to be a large commercial ramp tied to demand from Anduril and other defense-related customers.
On the debt front, Kraken carries $15.8 million, primarily from its revolving credit facility. Of that, $15 million is currently drawn, with terms set at prime + 1–1.75%, which remains manageable in this rate environment and reflects the company's solid credit profile.
Now, about cash flow. At first glance, Kraken’s 2024 operational cash flow paints a negative picture—$11.6 million in cash burn versus $8.4 million in positive OCF the year before. But dig deeper and the story becomes more nuanced. This was a year of deliberate investment: in inventory, infrastructure, and capability, all to meet surging demand.
The company chose to lean in and fund growth now, rather than hold back and risk falling behind. And with a war chest now in place, it can afford to do exactly that.
On the income statement, Kraken delivered one of its best years yet. Revenue in 2024 hit $91.3 million—up 31% from 2023. Gross margin held strong at 49%, improving by 15 basis points, which is impressive given the growth scale. Expenses rose just 6%, meaning Kraken captured meaningful operating leverage. The result? Operating income surged nearly $9 million, a 282% increase year-over-year.
Much of the cost control came from smart government partnerships. Investment tax credits doubled, and Kraken no longer had to absorb the $2.8 million impairment charge that weighed on 2023’s numbers. Even if you normalize for those one-time benefits, core expenses only rose 18%—well below the 31% top-line growth.
Net income capped off the year at $20.1 million, thanks in part to a $9.7 million income tax recovery. That’s a big leap from 2023’s $5.5 million, and it sends a clear message: Kraken’s business isn’t just growing—it’s turning into a highly profitable operation with real staying power.
Company:Ouster, Inc
Quote: $OUST
BT: $14-$15
ST: $28-$30
Sharks Opinion:
Some of our longtime Sharks members might remember Velodyne Lidar—one of the more memorable SPAC trades we nailed during the pandemic-era frenzy.
At the time, Lidar was seen as a revolutionary technology, critical to autonomous vehicles and robotic vision. But like many SPACs from that period, Velodyne couldn’t maintain its momentum. As revenues stagnated and investor sentiment collapsed, the company ultimately merged with its competitor Ouster just to survive.
After that merger, we stopped tracking the name closely. Frankly, Lidar felt like a busted theme—overhyped, underdelivered, and crowded with too many players chasing too few contracts.
But in 2025, the robotics theme has come roaring back to life, and with it, renewed interest in enabling technologies like Lidar. Ouster (OUST) has been a quiet beneficiary of that momentum. The stock is already up 99% year-to-date, catching a strong wave of capital rotation back into anything related to automation, AI, and advanced sensing.
Now let’s be clear we're not chasing this name blindly. The run-up is significant, and any time a stock doubles in a short window, caution is warranted. That said, just because something’s already moved doesn’t mean it’s finished. If the robotics narrative continues to gain strength, and Ouster can capture even a fraction of that growth, the stock could still have legs.
So while Ouster sits near the bottom of our list in terms of ideal entry timing, it's firmly on our radar again. If we get any kind of meaningful pullback or stronger evidence that large-scale commercial traction is here this could become an actionable setup.
Description: Ouster, Inc. provides lidar sensors for the automotive, industrial, robotics, and smart infrastructure industries in the Americas, the Asia-Pacific, Europe, the Middle East, and Africa. Its products include high-resolution scanning and solid-state digital lidar sensors, analog lidar sensors, and software solutions. The company offers Ouster Sensor, a scanning sensor; and Digital Flash, a solid-state flash sensor.
While many remember Ouster as the company that merged with a struggling Velodyne to survive the post-SPAC wipeout, what’s emerged since is a far more focused and disciplined player quietly scaling into a $70 billion market opportunity. Ouster isn’t just clinging to the automotive hype that once defined the LiDAR space they’re actively positioning themselves for broader adoption across four key verticals: automotive, industrial, robotics, and smart infrastructure.
The company believes that non-automotive LiDAR applications
think heavy machinery, warehouse robotics, autonomous delivery, and city traffic systems—will outpace traditional auto sector adoption in the years ahead. That’s a bold claim, but it’s backed by meaningful execution: nine straight quarters of meeting or exceeding guidance, all while maintaining a lean cost structure.
Revenue is currently balanced across all four sectors, with a growing list of high-profile clients including John Deere, Komatsu, Motional, May Mobility, Forterra, and Serve Robotics. These aren’t speculative bets—they’re real companies with real deployment plans.
Financially, Ouster is on relatively solid footing. As of March 31, they had $171 million in cash and burned through about $37 million so far in 2025. Management is guiding for 30–50% annual revenue growth with gross margins in the 35–40% range numbers that, if sustained, could push the company toward profitability sooner than many of its peers.
The key for Ouster now is scale.
With many of its customers moving from prototype stages into commercial deployment, the next few quarters could be pivotal. If demand materializes as expected, Ouster has the infrastructure and capital to ride that wave.
Yes, the stock has already surged, but that doesn’t negate the long-term potential. If LiDAR becomes a foundational layer of the robotics and automation stack as Ouster is betting—it may still be early days for this name.
Ouster kicked off 2025 with solid execution, reporting $33 million in revenue a 26% year-over-year increase and up 8% from the prior quarter. That topline growth was fueled by the shipment of approximately 4,700 sensors, with strong demand coming from the industrial and automotive sectors. Key applications included warehouse automation, yard logistics, and the ramping rollout of robotaxis.
Gross margins were a standout. GAAP gross margin improved to 41%, up dramatically from 29% a year ago, while non-GAAP gross margin came in at 46%, reflecting a more favorable product mix and the inclusion of around $2 million in high-margin patent royalty revenue. That royalty alone contributed roughly 300 basis points to both GAAP and non-GAAP margins, helping offset ongoing macro and supply-chain volatility.
On the bottom line, Ouster posted a net loss of $22 million narrower than the $24 million loss in both Q1 2024 and the previous quarter. Adjusted EBITDA loss also improved, shrinking to $8 million from $12 million a year earlier. These results mark continued progress toward Ouster’s stated goal of profitability.
Importantly, the company remains well-capitalized, ending the quarter with $171 million in cash, equivalents, and short-term investments. With geopolitical uncertainty still looming, Ouster is proactively engaging with customers to avoid disruption and maintain deployment momentum.
All told, Q1 underscores a company still in transition but clearly heading in the right direction. The margin expansion, customer diversification, and patent monetization are all green flags for a business that’s trying to move past its SPAC-era legacy and prove it has staying power in the next wave of automation and robotics.
WestPark Capital Upgrades Ouster to Buy, Announces $13.68 Price Target
Oppenheimer Initiates Coverage On Ouster with Outperform Rating, Announces Price Target of $16
Cantor Fitzgerald Maintains Overweight on Ouster, Raises Price Target to $11
Rosenblatt Maintains Buy on Ouster, Maintains $17 Price Target
Company: Serve Robotics Inc.
Quote: $SERV
Sharks Opinion:
Serve Robotics is a name we flagged last year but never pulled the trigger on mostly because the hype hadn’t met the execution yet. But with the stock consolidating and robotics back in the spotlight, Serve is climbing toward the top of our watchlist for a potential trade with real upside.
On paper, the idea of delivery robots seems like a no-brainer. Labor shortages, rising last-mile logistics costs, and the push toward automation all point in one direction. But as always, it’s not just about the idea—it’s about execution. Who gets the model right? Who wins the partnerships? Who secures the regulatory approvals and scales profitably?
Serve has a lot going for it. The company’s investor base includes heavy hitters, it’s landed notable commercial partnerships, and its tech has real-world traction. What it doesn’t have at least not yet is time.
That’s the crux of the risk here. It’s not about whether the idea will work; it’s whether Serve can survive long enough to capitalize on it. Will it cross the bridge to mass adoption, or burn through cash before the finish line?
With the robotics trade catching fire in 2025, Serve could find itself in the right place at the right time. If investors start seeking out the next real use-case winner beyond humanoids and factory automation, a name like Serve backed by real-world deployment might finally get its breakout moment.
BT: $4-$8 seem almost no brainer
ST: $18-$30 (the speculation for what it could be is its greatest advantage)
Description: Serve Robotics Inc. designs, develops, and operates low-emission robots that serve people in public spaces for food delivery activity in the United States. It builds self-driving delivery robots. Serve Robotics Inc. was founded in 2017 and is headquartered in Redwood City, California.
This is why Serve is a no brainer investment from a far.
The company is taking aim at one of the biggest inefficiencies in modern logistics: using full-sized cars and paid human drivers to deliver a $12 meal. It’s an outdated system in a world where automation is rapidly eating into labor-heavy industries. Serve believes the last mile will be owned by robots and drones, not delivery apps and gig workers and that belief aligns with a $450 billion market opportunity projected by 2030.
What makes Serve stand out is that it’s not just pitching a concept. Its robots have already reached Level 4 autonomy meaning they can navigate sidewalks and deliver food within geo-fenced urban areas without human intervention. These aren’t beta tests either. Since early 2022, Serve has successfully completed over 100,000 deliveries in Los Angeles, and they’ve done it with 99.8% accuracy. That level of reliability already exceeds what you’d get from a human workforce, and it positions Serve as a real player in the future of urban delivery.
Execution is always the final hurdle—but from a distance, it’s hard not to see Serve as one of the purest and most grounded bets in the delivery robotics space.
Scaling Fast, But the Clock Is Ticking
Serve Robotics is in execution mode, aiming to deploy 2,000 of its new Gen3 robots this year as part of its agreement with Uber Eats. The company launched 250 robots in Q1 2025, with 700 more expected by the end of Q3 and the remainder scheduled for Q4. The Gen3 rollout is already enabling geographic expansion, with new markets like Miami and Dallas online and Atlanta queued up for this quarter.
On the financial side, Q1 revenue came in at just $440,465 a 53% drop from the same quarter last year. But that decline isn’t as bad as it looks on the surface. The year-ago quarter was boosted by a one-time software licensing deal with Magna, which skews the comparison. A more relevant metric: Q1 revenue was up 150% sequentially from Q4 2024, signaling the core delivery business is starting to pick up momentum.
According to Yahoo! Finance estimates, Serve could generate $6.8 million in revenue this year, which would imply rapid acceleration in the back half of 2025 as more robots hit the streets. But the excitement around top-line growth is tempered by a deeper concern.
Serve lost $13.2 million in Q1 alone, putting it on track to surpass its $39.2 million loss from 2024. R&D remains the biggest expense category consistently eating up about half of total operating costs which isn’t unusual for an early-stage robotics company, but it’s a burn rate that needs to be watched.
The good news: Serve ended Q1 with $197.7 million in cash, giving it enough runway to fund operations for the next couple of years without needing to panic.
The challenge? If the company doesn’t show a clear path to profitability, it may have to return to the markets to raise more capital which would dilute existing shareholders significantly.
In short, Serve is scaling fast and making the right moves but it’s a race against time.
Serve’s latest Gen3 robot marks a major leap forward in both performance and economics, which could significantly accelerate the company’s path to scale.
Powered by Nvidia’s Jetson Orin system, the Gen3 robot delivers five times the onboard computing power of its predecessor critical for real-time decision-making and safe autonomous navigation. It also features Ouster’s REV7 lidar for enhanced perception and obstacle detection.
Beyond raw processing power, the upgrades translate into real-world gains: the new bots are twice as fast, have double the operational range, and carry more payload—enough to handle up to four 16-inch pizzas per run. That’s a meaningful boost in delivery efficiency per trip.
Just as important is the cost side of the equation. Serve has partnered with Magna International, a $14.5 billion automotive components manufacturer, to reduce production costs. The result? Gen3 units are up to 65% cheaper to produce. That’s a massive improvement in unit economics and a vital step toward profitability.
Serve is aiming for a flat $1 per delivery model across all markets. Reaching that target at scale requires not just speed and range, but low-cost manufacturing and minimal downtime.
Gen3 checks all those boxes. With 2,000 units expected to roll out by the end of 2025, this new generation of robots could finally give Serve the scale advantage it needs to turn a compelling idea into a cash-flowing business.
Cantor Fitzgerald Initiates Coverage On Serve Robotics with Overweight Rating, Announces Price Target of $17
Northland Capital Markets Maintains Outperform on Serve Robotics, Raises Price Target to $23
Ladenburg Thalmann Initiates Coverage On Serve Robotics with Buy Rating, Announces Price Target of $16
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