2 Robotics Stocks to Play Embodied AI in 2025

Recent developments and advancements in AI may have been overshadowed by tariff updates in recent months. Undoubtedly, Trump tariffs are moving markets, and with something new for investors to digest on the daily, it seems like we should expect tariff news (and the Fed’s reaction) to continue being the hot topic for the next couple of months, at least until there’s more certainty regarding the longer-term roadmap on tariffs.

Don’t let the tariff fears let you forget about the ongoing AI boom, though. It’s still in play. And it’s more worth keeping tabs on for longer-term investors who are looking well beyond tariffs that could prove more transitory in nature.

Of course, recession risks are real and rising, at least according to some of the big banks who view tariff threats as having the potential to derail what would have otherwise been a robust economy with an AI boost that’s starting to come into effect.

Don’t confuse an AI correction for the bursting of a bubble

While there’s also an AI correction going on (AI stocks have been clobbered much more than most other names of late) behind the tariff turbulence, I wouldn’t turn my back against the top AI innovators as their share prices come in. Sure, there’s some risk that firms have overinvested in AI data center capacity.

But as the quantitative benefits of AI begin to come to light ahead of the rise of AI agents (or agentic AI as it’s known by others), perhaps now isn’t the best time to throw in the towel in anticipation of a recession and spectacular bursting of the AI bubble. Indeed, investors want to see some substance from the big AI spenders.

And in due time, I believe they’ll finally get what they want as AI models continue advancing at an unfathomable rate. With new combatants recently accelerating forward in this AI race — most notably DeepSeek and Elon Musk’s Grok, which have shown they can put up a fight with OpenAI’s ChatGPT — staying the course on AI seems like a smart bet, even in the face of tariff tremors.

Arguably, the latest correction in stocks could bode better for the longevity of the AI boom, as investor euphoria and appetite for speculation are put into check in a way it wasn’t in the run-up that ultimately led to the dot-com bust. Either way, embodied AI is a profoundly powerful trend to watch for over the next five years as more advanced AI systems take on a physical form at home, in the workplace, and just about everywhere. Here are two robotics stocks that could benefit most from the rise of the robots.

Nvidia

Nvidia (NASDAQ:NVDA) CEO Jensen Huang welcomed a number of robots on the stage in recent years, and not just because he wanted to put up a good show for the audience. Apart from having the top hardware that goes into the core of next-gen AI data centers, Nvidia also has a ticket to the rise of physical AI.

Huang believes physical AI stands to revolutionize a wide range of industries. And it’s not just about the automation of manufacturing. As robots find their way in the home, on the roads (robotaxis), and in the office, perhaps it’s time to stick with the firms that are pushing to make such innovation possible.

Jensen Huang has been right almost every step of the way, and I think it remains a good idea to stick with him, even as NVDA stock faces its toughest bout of turbulence in years. The stock’s going for just 37.9 times trailing price-to-earnings (P/E), which is too low given the Blackwell chip catalysts and longer-term robotics tailwind that could propel Nvidia back above a $3 trillion market cap.

Microsoft

Microsoft (NASDAQ:MSFT) is another physical AI winner that’s been under unfair pressure in recent months. The stock hasn’t done anything in around a year and a half now. Now down nearly 17% from its highs, perhaps there’s an opportunity for investors to punch their ticket as Microsoft seeks to raise a new bar on its AI ambitions as it aims to stay ahead of fast-rising rivals like DeepSeek while reducing its dependence on OpenAI.

Can Microsoft produce an even more powerful model to put in the Copilot seat? I wouldn’t at all be surprised with Mustafa Suleyman as CEO of Microsoft AI.

With an incredibly impressive Magma multimodal AI foundation model, which aims to help AI agents see the world, Microsoft may very well be one of the more underrated robotics plays to bet on. With shares going for 31.5 times trailing P/E, the AI titan may prove a bargain once the stock market is ready to move on from its tariff fears.