Why the humanoid robot story matters

 I realize we've had a lot of robot content on the blog recently, and a lot of readers—particularly those who don't follow us regularly—may be wondering what's going on, so this might be a good time for a quick overview. This really is a big story—no, strike that—this is two or three really big and important stories, all of which interlock around a familiar cast of characters. It was Elon Musk who drew me into this, so let's start with him. Musk is, at least on paper, the richest man in the world, but his fortune is mainly based on the wildly inflated stock of a small and imploding car company. The bull case for owning Tesla at this point comes down almost entirely to the supposed potential of two products: robotaxis and humanoid robots—with the latter being probably the bigger driver. That qualifier is essential for understanding this discussion. Unlike Boston Dynamics, arguably the leader in the field, Tesla is not developing a line of robots designed for various tasks and environments. Instead, Musk has a very specific pitch. He is developing one product—a humanoid robot named Optimus—that, he insists, will be able to do anything and will therefore usher in a new age of prosperity and abundance (Musk’s messianic tendencies are especially notable when he talks about this subject). We've already talked about how small the market for humanoid, bipedal robots is likely to be and how far behind the pack Tesla is in terms of technology, but perhaps the most striking fact to keep in mind is that it probably doesn't matter. The market cap for the company is insanely high, with a P/E ratio that has scraped—and possibly briefly broken—200. If Tesla were to start trading on any kind of reasonable basis tomorrow, the valuation of the company would drop by one and probably closer to two orders of magnitude. Between here and there, Elon Musk would experience numerous margin calls, since we know he has been using that stock to secure loans. If the market were to suddenly become rational, Musk might very well find himself with a negative net worth. The valuation is so inflated that Musk is in the position of the gambler who needs to hit the trifecta just to get out of the hole. 

The second story, because this is 2025, involves AI 

The humanoid robot hype bubble has a symbiotic relationship with the larger AI hype bubble. The narrative of the latter is a key part of the viability arguments for the former, while the humanoids provide a potential market for AI companies. (One of the dirty little secrets of the AI bubble is that, so far, no one has come up with a business model where revenue—let alone profit—justifies the current level of investment and excitement.) In many cases, the people pumping AI are the same ones pumping humanoids, often as part of the same pitches. This is partly due to the previously mentioned symbiosis and partly due to the compatibility of the narratives. Both pitch a world based more on science fiction tropes than on actual technology. This leads to the third big narrative that humanoids play into: techno-optimism and the coming abundance utopia. The idea being pushed by a wide array of prominent “thinkers” (with varying degrees of sanewashing, ranging from the reasonable-sounding Ezra Klein to the off-his-meds delusional Elon Musk) is that we are about to enter a golden age where machines will meet our every need and fulfill our every desire, as long as we trust our tech overlords and give them anything they want. 

Abundance is definitely having a moment...

SCOOP: Senate Democrats have invited New York Times columnist Ezra Klein and Democratic data guru David Shor to talk to senators at their annual one-day issues retreat on Wednesday, sources tell Axios. [image or embed]

— Axios (@axios.com) May 5, 2025 at 6:05 PM

 ... but only those who've been following closely realize the movement grew out of Marc Andreessen's techno-optimism, and if you scratch the surface, you'll soon hit LLMs, tech messiahs and, yes, humanoids.

The fortunes and political power of Elon Musk

The biggest hype bubble since Web 3 and the metaverse 

The trendy solution that Democratic leadership is jumping on.

All pretty good reasons to follow this story.