Key Points
- The largest technology event of the year introduced several noteworthy innovations that are expected to lead the industry in the coming months.
- Artificial intelligence (AI) is rapidly expanding beyond software into the physical world, as companies across industries harness it to create smarter robots and automated systems that drive unprecedented efficiency, precision and scalability.
- The mobility sector continues to evolve, incorporating advanced autonomous features that improve safety, performance and user experience.
- Electrification is gaining momentum across industries, with innovators meeting growing demands for sustainable, automated and energy-efficient solutions in areas like mining, agriculture and transportation.
The 2025 Consumer Electronics Show (CES), held in Las Vegas in January, showcased cutting-edge innovations, including advanced artificial intelligence (AI), decentralized systems, health technology and humanoid robots, all pointing to the future of living, working and experiencing the world. The overarching message was clear: it is all about AI.
AI has evolved from a standalone category into a technology embedded in nearly every innovation on display. From AI-powered lawn mowers and health diagnostics to next-generation gaming, video editing and customer experience tools, AI has become the core driver of transformation across industries.
One key theme at the conference is the broadening of AI applications. Generative AI—producing new content such as text, images, audio, and video from learned patterns—has been the major driver behind AI’s growth. Agentic AI, which perceives, reasons, plans, and acts autonomously, is now being deployed in more use cases. An AI agent takes inputs and reasons about them and executes actions to pursue objectives. Physical AI involves interacting with the physical environment, such as robots or embedded AI systems that can manipulate objects or navigate spaces, autonomous drones, warehouse robots, and self-driving cars.
Capex: The Race Is On
AI needs facilities, machines and power, and all of that has, in turn, fueled its own new spending involving real estate, building materials, semiconductors and energy. Energy providers have seen a huge boost, because data centers require as much power as a small city. In the AI era, capital expenditure (capex) has come to signify what a company spends on data centers and the components they require. The biggest tech players have increased their capex by tens of billions of dollars this year, and they show no signs of pulling back in 2025.
AI demand is quickly broadening away from enterprise software applications. For example, car manufacturers are likely to maintain two factories: one to build the car, and the other to train autonomous vehicles via simulation and synthetic data—every one million autonomous vehicles may require $2-3 billion in data-center capex to support it. This data-center capacity will be used for data collecting, training, and edge-case development to ensure that autonomous vehicles are functioning at their most efficient and safest levels.
AI Computing and Automation Continues to Mature
CES showcased the rapid evolution of AI and its growing integration into everyday products and services. A major AI company introduced new offerings in personal computing, gaming, robotics and self-driving vehicles. Hardware manufacturers highlighted that advancements in lightweight large language models (LLMs) now enable generative AI capabilities on consumer devices with on-device processing, moving towards ubiquitous AI.
New innovations in personal computing aim to make AI more accessible. A compact AI supercomputer, the size of a modern laptop, can run 200 billion parameter LLMs, empowering professionals and students alike. Users can develop and deploy models on their desktops or in the cloud seamlessly. Advances in PC hardware supporting AI, combined with a large install base ready for an upgrade, suggest a potential PC refresh cycle in 2025.
AI Applications Continue to Progress
As AI hardware gets more efficient, progress on training data and development methods continue to expand AI’s utility. Among the significant announcements at CES was the introduction of models that can generate photorealistic video that developers can use to train their autonomous robots and vehicles at a lower cost than traditional data-collection methods. These models are intended to produce synthetic training data, enabling machines to understand the physical world, much like how LLMs facilitate natural communication for chatbots. This innovation is expected to expand the impacts of AI into robotics research and autonomous driving by addressing the bottleneck of limited data for robotic and self-driving applications.
As vertical specific training data sets proliferate and models become more efficient, agentic AI appears to be much more imminent than previously expected. Numerous attendees highlighted progress in releasing AI assistants, from a system utilizing AI agents to build AI applications that can automate enterprise work, to a simple LLM assisting with the use of household appliances. These AI agents function as knowledge robots capable of reasoning, planning and analyzing large amounts of data to derive real-time insights from various sources such as images, videos and PDF files. While advancements in semiconductors and expansive data center builds have captured a great deal of attention, improvements in data gathering and software architecture have quietly improved model performance to the point where more and more companies are ready to ship to consumers.
Mobility
This year’s transportation industry exhibitors focused on assisted and autonomous driving technologies, with significant advances in autonomous driving. Companies highlighted progress toward level 4 (L4) systems, which can handle unpredictable surroundings without human intervention. Currently, most available systems are L2 and need human backup. Recent US market expansions and potential favorable regulations have renewed the relevance of autonomous vehicles in public markets.
CES showcased autonomous tech across various industries, including long-haul trucking. One company revealed progress towards L4 autonomous trucking, logging 50,000 miles in August 2024. Several firms announced partnerships to speed up L4 semi-truck deployment. These advancements highlight autonomous vehicle investment impacts beyond consumer ridesharing into multiple sectors.
Autonomous vehicle advancement will require improvements in a number of sensor-oriented sub-industries. Light detection and ranging (LiDAR) technology, a cornerstone of autonomous vehicle systems, is experiencing exponential growth in both capability and adoption. CES demonstrations revealed significant price reductions alongside major performance improvements, driving increased integration by automotive manufacturers for both autonomous features and enhanced safety systems. There were additional tech solutions on display that could help accelerate the speed of performance enhancements and the commercialization of driverless vehicle systems.
Robotics
AI advancements are accelerating the robotics industry, enabling the rapid advancement in humanoid robots. Once confined to science fiction, these human-like machines were displayed at CES as tangible, market-ready innovations. Humanoids are creating a favorable investment opportunity across a wide value chain including AI chipmakers, AI model developers, sensor developers, makers of systems for connected devices, and essential component and material suppliers.
One CEO investing heavily behind the robotics theme spoke about the next frontier of AI being physical AI. He believes that given the innovation in AI, we can now start infusing AI models with synthetically generated physical world data to exponentially drive the usefulness of robots. Historically, the lack of physical world data made it hard for robots to fully understand our world, but with these breakthroughs, use cases and the ability of these robots to efficiently tackle them, it has become much more tangible.
Displays also showed how humanoid robots can handle dangerous and repetitive warehouse tasks, including moving heavy containers. The first commercially available humanoid designed for warehouse tasks is being used in pilot programs in the warehouses of a large online retailer. The robot’s success has driven such high demand that the manufacturer is constructing a dedicated factory targeting annual production of 10,000 units.
Investment Implications of AI-Driven Innovations
CES 2025 showcased AI-driven innovations that have significant investment implications across multiple industries. The rapid advancement of AI-powered computing and automation is driving capital toward semiconductor development, cloud computing, and edge AI technologies. Increased demand for high-performance chips and AI-optimized hardware is expected to accelerate investment in fabrication facilities, supply-chain resilience, and next-generation computing architectures. Smart home automation, robotics and AI-integrated consumer electronics are poised for strong growth, attracting investment in companies developing energy-efficient, adaptive technology. The rise of AI-driven health-care solutions, including autonomous medical devices and real-time health monitoring, suggests expanding opportunities in digital health, telemedicine, and biotechnology sectors.
Autonomous mobility, AI-powered logistics and predictive maintenance are driving investments in automotive technology, with a strong focus on electric and self-driving vehicles. The integration of AI in creative industries, from content generation to real-time analytics, signals increased funding toward AI-driven enterprise software and automation tools that enhance productivity. Sustainability was a key theme, with AI-enabled energy management and smart grid innovations attracting investments in renewable energy, battery technology, and carbon-reduction solutions. As AI adoption accelerates across industries, investors are focusing on companies positioned to benefit from automation, data analytics, and intelligent systems. The shift toward AI-driven business models is likely to reshape market dynamics, emphasizing long-term growth potential in AI infrastructure, software, and industry-specific applications. CES 2025 reinforced AI as a defining investment trend, presenting opportunities in sectors undergoing digital transformation and technological disruption.
As AI adoption accelerates across industries, investors are focusing on companies positioned to benefit from automation, data analytics, and intelligent systems. The shift toward AI-driven business models is likely to reshape market dynamics, emphasizing long-term growth potential in AI infrastructure, software, and industry-specific applications. CES 2025 reinforced AI as a defining investment trend, presenting opportunities in sectors undergoing digital transformation and technological disruption.
Authors
Shivam Kollur
Research analyst, Equity Research team
Brian Byrnes
Research analyst, portfolio manager
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