The hidden value of physical AI

Physical AI represents a shift from digital-only generative models to autonomous systems capable of manipulating the real world, including factories, warehouses, and infrastructure. With 44% of global paid work hours currently tied to physical labor, this technology offers significant productivity gains by moving beyond pre-programmed, repetitive tasks toward intelligent systems that sense, adapt, and respond to complex environments. McKinsey partners Ani Kelkar and Mark Patel emphasize that successful deployment requires moving past mere demonstrations to reliable, scalable solutions that integrate into existing workflows. While hardware and supply chain maturity remain critical, the primary value lies in redesigning operational processes to achieve higher throughput and safety. This emerging market is projected to reach $370 billion by 2040, driven by the integration of advanced software models with physical embodiment.