The world of AI is moving at a very fast pace. Many companies are still working through what Generative AI means for them, even as the next wave of applications begins to take shape. Agentic AI takes this a step further by allowing systems to plan, use tools, and act on their own in digital environments.
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The next progression from here is Physical AI, where systems move beyond software to operate in and interact with the real world.
Goldman Sachs’ Mark Delaney, an analyst ranked among the top 2% on Wall Street, recently held investor meetings with representatives from companies operating in the Physical AI ecosystem. Tesla (NASDAQ:TSLA) is naturally a prominent name here, given it is developing both AVs (autonomous vehicles) and robotic humanoids (Optimus).
The company said it is making solid progress on Optimus hardware, with particular focus on improving the hand and forearm, long viewed as one of the toughest engineering challenges, while prioritizing “capability, reliability, and manufacturability” to enable scaling. Optimus uses a mix of rotary and linear actuators, with many core components developed in-house to protect IP and support performance and scalability, while commoditized parts like cameras are sourced externally. AI and model training remain a “key focus,” especially enabling the robot to translate human motion into precise physical actions. Tesla plans to deploy Optimus internally first, supported by a dedicated training “academy,” before targeting external shipments as early as next year.
Separately, Tesla highlighted continued progress in FSD and robotaxi development, noting “strong progress” from its end-to-end approach but adhering to a cautious rollout of unsupervised driving for safety reasons, with expansion expected to accelerate across multiple cities and regions, including anticipated regulatory approval in Europe, starting in the Netherlands.
The 5-star analyst currently has a Neutral rating for TSLA shares, while his $403 price target implies the stock is fully valued. (To watch Delaney’s track record, click here)
One company looking to siphon away EV market share from Tesla is Rivian (NASDAQ:RIVN). The company is also making inroads in the Physical AI realm. Rivian highlighted steady progress on its RAP1 chip, noting receipt of B0 samples – a later-stage prototype closer to production quality – and a finalized production-intent design as it advances testing across both hardware and software, with the chip set to power its Gen 3 autonomy platform in the R2 by late 2026. Management expects RAP1 to reduce BOM costs vs. merchant silicon while also giving Rivian earlier access to leading-edge chip technology, and indicated no concerns around memory supply.
Beyond vehicles, RAP1 could be useful in robotics applications, aligning with Rivian’s spinout of Mind Robotics focused on physical AI. On autonomy, the company is progressing toward point-to-point driving later this year, seeing strong adoption of its Universal Hands-Free (L2+) system, with usage rising from 8% to 15% of miles driven, and continues to target eyes-off capability with its Gen 3 stack. Rivian emphasized that training data quality and diversity matter more than sheer volume, leveraging its sensor-rich fleet to improve models, and views autonomy not only as a vehicle sales driver but also as a standalone offering through products like Autonomy+.
Delaney’s rating for RIVN is also a Neutral, backed by a $15 price target, suggesting the shares are overvalued by 5%.
As for overall Street expectations for both names, TSLA claims a Hold consensus rating, based on a mix of 13 Buys, 11 Holds and 7 Sells. At $399.25, the average target closely matches Delaney’s objective. (See Tesla stock forecast)
The analyst consensus also rates RIVN a Hold, a rating based on 9 Buys, 7 Holds and 6 Sells. The forecast calls for 12-month returns of 11%, considering the average target clocks in at $17.45. (See Rivian stock forecast)
Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.