Physical AI will be one of the fastest-growing areas of artificial intelligence over the next four to five years [1].
This projection suggests a shift in the AI landscape from purely digital interfaces to tangible applications. The convergence of robotics, autonomous vehicles, and machine-to-machine connectivity is expected to drive this expansion, potentially altering the valuation of aerospace and automotive companies.
Timothy Horan, a technology analyst at Oppenheimer, said these views during an interview on CNBC’s ‘Squawk Box’ program [2]. He said that the integration of AI into physical systems is a primary catalyst for the current trajectory of the industry.
Horan linked these technological trends to his valuation of SpaceX. He said he set a $250 price target [3] on the company, while referencing shares at $150 [3]. The analyst believes the growth of physical AI is a key component in the company's potential value.
Beyond individual company targets, Horan discussed the broader strategic implications of AI integration. He said a TSLA-SpaceX merger could amplify AI capabilities long-term [4]. This synergy would likely involve combining Tesla's automotive AI with the aerospace capabilities of SpaceX to accelerate the development of physical AI systems.
Horan said that the timeframe for this rapid growth is the next four to five years [1]. This period is seen as the window where machine-to-machine connectivity and autonomous systems will reach a critical mass of deployment.
“Physical AI will be one of AI's fastest‑growing areas over the next four to five years.”
The shift toward 'physical AI' marks a transition from Generative AI, which produces text and images, to embodied AI that interacts with the material world. By linking this trend to SpaceX and Tesla, the analysis suggests that the next frontier of AI value is not found in software alone, but in the hardware capable of executing autonomous physical tasks at scale.
