Advances in Physical AI Reshape Robotics, Automation

Key Terms

physical ai technical

Physical AI combines artificial intelligence with physical devices or environments, enabling machines to interact with and adapt to the real world in a human-like way. It matters to investors because it can lead to smarter robots, autonomous vehicles, or advanced sensors that improve efficiency and open new markets, potentially creating significant business opportunities and competitive advantages.

autonomous mobile robots technical

Autonomous mobile robots are self-guided machines that move around workplaces—like self-driving carts or robotic helpers—to carry goods, inspect equipment, or perform routine tasks without a person steering them. They matter to investors because they can lower labor costs, speed up operations, and scale capacity much like adding more automated assembly lines, while also carrying adoption, integration and regulatory risks that can affect a business’s cost structure and growth prospects.

robotics-as-a-service financial

Robotics-as-a-service (RaaS) is a business model where companies rent or subscribe to robots and related software instead of buying them outright, much like leasing a car or subscribing to cloud storage. It matters to investors because it turns large, one-time equipment costs into recurring revenue for suppliers while lowering upfront barriers for users, which can speed adoption, smooth cash flow and create predictable long-term income streams.

digital twins technical

Digital twins are virtual replicas of physical objects, systems, or processes that simulate their real-world counterparts in real time. They allow users to monitor, analyze, and predict how the actual entity will behave under different conditions. For investors, digital twins can provide valuable insights into performance and potential risks, helping to make better-informed decisions.

enterprise resource planning technical

Enterprise resource planning (ERP) is a comprehensive software system that helps organizations manage and coordinate their core activities—such as finance, supply chain, human resources, and manufacturing—within a single platform. It streamlines operations by providing real-time information, enabling better decision-making. For investors, ERP systems indicate how efficiently a company runs and can signal its ability to adapt and grow in a competitive market.

warehouse management technical

Warehouse management is the set of processes and tools a company uses to receive, store, pick and ship goods from its storage sites, like a playbook for organizing a busy storeroom. Investors care because efficient warehouse management cuts costs, speeds delivery and reduces errors—similar to a well-run kitchen serving more meals faster—which can boost profit margins, customer satisfaction and the company’s competitive edge.

autonomous systems technical

Autonomous systems are machines or technology that can operate and make decisions on their own, without needing constant human guidance. They use sensors, software, and rules to perform tasks independently, much like a self-driving car navigating traffic. For investors, understanding autonomous systems is important because they are transforming industries, increasing efficiency, and creating new opportunities for innovation and growth.

managed services technical

Managed services are when a business hires an outside provider to run and maintain a specific ongoing function—commonly IT, cybersecurity, networks, or back-office tasks—under a contract that includes monitoring, updates and problem resolution. For investors this matters because it creates predictable costs and recurring revenue for the provider while reducing operational risk and capital spending for the client, much like hiring a building superintendent to keep systems running so management can focus on growth.

Enterprises are widely deploying AI systems for real-world functions, ISG Provider Lens^® report says

STAMFORD, Conn.--(BUSINESS WIRE)-- Enterprises are rapidly adopting AI-enabled robotics in core operations to improve efficiency, resilience and safety, according to a new research report published today by Information Services Group (ISG) (Nasdaq: III), a global AI-centered technology research and advisory firm.

The 2026 ISG Provider Lens^® global Intelligent Robotics and Physical AI Services report finds that enterprises are building orchestrated fleets of intelligent machines embedded in logistics, infrastructure and industrial environments. These systems use innovations in physical AI that enable real-time perception, reasoning and action.

“Static automation no longer meets the needs of rapidly changing industries,” said Steve Hall, chief AI officer at ISG. “Enterprises are partnering with service providers to deploy AI-powered autonomous systems that continuously learn and adapt to new requirements.”

Many enterprises in North America are scaling warehouse automation and logistics robotics to address labor shortages and improve throughput. They are deploying autonomous mobile robots and drones to handle repetitive and high-risk tasks while increasing operational consistency. These systems enhance productivity by improving task completion rates and reducing manual intervention across supply chains. Adoption of broad-based robotics systems and services is accelerating as companies prioritize uptime and throughput.

The use of autonomous systems in real-world environments is improving service delivery and operational coverage. Drone delivery programs in the U.S. have exceeded 150,000 deliveries, demonstrating measurable gains in last-mile efficiency and fulfillment speed. In parallel, continuously operating AI-enabled security robots have reduced crime incident rates.

European enterprises are adopting AI-enabled robotics as part of a manufacturing digitalization push, with a strong emphasis on regulatory compliance, data sovereignty and cybersecurity. In Asia Pacific, government-backed industrial modernization initiatives are driving embedded AI and robotics adoption to increase manufacturing scale.

Enterprises are shifting toward flexible consumption of robotics to scale adoption more efficiently. Robotics-as-a-service models reduce capital expenses while enabling faster deployment and iteration of intelligent systems. At the same time, organizations are integrating robotics platforms with enterprise systems such as enterprise resource planning and warehouse management to enable end-to-end automation, continuous learning, improved decision-making and more resilient operations across complex environments, ISG says.

“The competitive advantage in robotics no longer lies in the machines themselves, but in the ability to orchestrate AI, data and operations at scale,” said Yash Jethani, principal analyst at ISG and lead author of the report. “Enterprises are seeking providers that can bring full-scale robotics projects to fruition with governance, interoperability and accountability. Success depends on effective simulation, deployment, multi-vendor integration and lifecycle ownership.”

The report also explores other trends in intelligent robotics, including the increasing importance of safety standards and the growing role of digital twins in validating and optimizing deployments.

For more insights into the robotics and physical AI challenges faced by enterprises, along with ISG’s advice for addressing them, see the ISG Provider Lens Focal Points briefing here.

The report evaluates the capabilities of 79 providers across three quadrants: Consulting and Transformation Services, Integration and Engineering Services and Managed Services and Robotics as a Service.

It names Hitachi Digital Services as a Leader in all three quadrants. Accenture, Capgemini and Infosys are named as Leaders in two quadrants each. ABB Robotics, Bastian Solutions, BCG, Booz Allen Hamilton, Brain Corporation, Daifuku, Deloitte, EY, Formic Technologies, GreyOrange, Honeywell Robotics, IBM, KNAPP, Knightscope, Locus Robotics, McKinsey & Co., Nomagic, OTTO (Rockwell Automation), Percepto, PwC, Siemens, SoftBank Robotics, SSI SCHÄFER, Swisslog, Symbotic, Inc. and Zebra are named as Leaders in one quadrant each.

In addition, Geek+, LTM, TCS and Vecna Robotics are named as Rising Stars — companies with a “promising portfolio” and “high future potential” by ISG’s definition — in one quadrant each.

A customized version of the report is available from Hitachi Digital Services.

The 2026 ISG Provider Lens global Intelligent Robotics and Physical AI Services report is available to subscribers or for one-time purchase on this webpage.

About ISG

ISG (Nasdaq: III) is a global AI-centered technology research and advisory firm. A trusted partner to more than 900 clients, including 75 of the world’s top 100 enterprises, ISG is a long-time leader in technology and business services that is now at the forefront of leveraging AI to help organizations achieve operational excellence and faster growth. The firm, founded in 2006, is known for its proprietary market data and research, in-depth knowledge and governance of provider ecosystems, and the expertise of its 1,500 professionals worldwide working together to help clients maximize the value of their technology investments.

View source version on businesswire.com: https://www.businesswire.com/news/home/20260512339568/en/

Press Contacts:

Laura Hupprich, ISG
+1 203-517-3100
laura.hupprich@isg-one.com

Eric Arvidson, Matter Communications for ISG
+1 978-518-4542
isg@matternow.com

Source: Information Services Group, Inc.