Humanoid Robotics: 2025’s Small-Cap Growth Story?

🌊 Making Waves

I’ve been increasingly interested in “hard tech” developments in recent months (as opposed to the typical overblown tech stock AI vaporware-of-the-week). There’s some very cool stuff coming out of the woodwork - check out Monumental Labs for one of my favorites - but this week, some new developments seem to be signaling that a burgeoning robotics renaissance is going mainstream.

Here’s what made waves this week:

🤖 Amazon Answers Optimus

Though humanoid and humanoid-esque robotics have been a quiet but expanding growth sector (see: Boston Dynamics) in recent years, Tesla $TSLA ( ▲ 3.67% ) is likely the undisputed large-cap, brand-name leader in the sector.

Even if Optimus isn’t ready for prime time, flashy PR stunts and existing robotics automation at its factories prove that Musk & Co have the talent, capital, and will to bring consumer-grade humanoid robots to your home.

‘Til now.

Amazon $AMZN ( ▲ 2.72% ) is building out a “humanoid park” as it plans to test and deploy a fleet of robots designed to “spring out” of its delivery vehicles to deliver to your doorstep.

While it isn’t quite the same Rosey the Robot vibe that Optimus offers, it points to a larger trend of increased emphasis on robots out in the world doing shit, compared to the existing advances mostly focused on warehouse and manufacturing automation.

Small-Cap Robotics Stocks

Small-cap humanoid robot stocks aren’t really a “thing,” yet, as large R&D spend means most of the smaller emerging players opt to stay private and out of the quarter-to-quarter financial fight.

This means that looking for “pick and shovel” stocks, or those manufacturing tech upstream of the robot manufacturers, is the best way to filter small-caps positioned to ride the humanoid robotics wave:

• Hesai Group $HSAI ( ▲ 2.15% ) manufactures LiDAR devices to help automated systems navigate their environment, with downstream clients already leveraging the tech for last-mile delivery platforms and street-sweeping robots.

• PROCEPT BioRobotics $PRCT ( ▼ 3.29% ) is the small-cap answer to Intuitive Surgical’s $ISRG ( ▼ 0.18% ) dominant spot in the international robotic surgery market. The company’s narrow emphasis on urologic surgery may help it carve out a unique niche to serve as a foothold for later expansion.

• Ambarella $AMBA ( ▲ 3.64% ) is another upstream pick, developing chips specifically tailored to enable robotics tech expansion. Their offerings include advanced image signal processing (important to move beyond LiDAR’s limitations), audio processing, and a range of typical AI processing tasks that help ensure demand as the robotics market matures.

✈️ Walmart Takes to the Skies

This story rhymes with Amazon’s robotics development, but instead of leveraging ground-based delivery tech, Walmart $WMT ( ▼ 0.5% ) is eyeing the skies.

The company plans to expand its drone delivery services to 100 additional stores within the year (it’s currently testing in the Dallas-Fort Worth and Arkansas regions) and bring its total market footprint to five states, adding Florida, Georgia, and North Carolina to the mix.

Small-Cap Drone Stocks

We looked at drone stocks in depth earlier this week as part of our Monday MegaTrends: Defense Tech feature, so I won’t rehash the Red Cat Holdings $RCAT ( ▲ 11.48% ) bull case (though it’s a great small-cap drone stock pick!).

Instead, check out Unusual Machines $UMAC ( ▲ 13.8% ), which ended the week on a high note; the small-cap drone stock climbed 35% over the past five days despite being down 50% on the year. UMAC is another one of those “pick and shovel” stocks, manufacturing small drone components to sell to downstream manufacturers.

A planned expansion into a new 17,000-square-foot motor production facility in Florida sparked the rally and points to plenty of upside potential if execs see a need to build production capacity out so extensively.

💾 A CHIP on Trump’s Shoulder

Finally, Commerce Secretary Howard Lutnick announced ongoing plans to tweak semiconductor company agreements originally made under the 2022 CHIPS Act in a bid to further boost domestic manufacturing capabilities. In a nutshell, he’s pushing grant recipients to commit greater funding to on-shored production buildouts, citing Taiwan Semiconductor’s $TSM ( ▲ 0.91% ) $100 billion boost to its original $65 billion pledge as a model example.

Pure-play domestic small-cap semiconductor stocks are a rare breed, but Navitas Semiconductor $NVTS ( ▲ 2.15% ) is a strong contender in the field with a large production facility co-located with its headquarters in Torrance, California.

A presence in China and Taiwan poses an operational risk, though the company’s Nvidia $NVDA ( ▲ 1.24% ) data center collab and fantastic balance sheet help mitigate regional risks.

💸 Small-Cap, High-Yield

Phibro Animal Health $PAHC ( ▲ 0.8% ) 

With a $975M market cap, Phibro offers a healthy 2% forward yield at current levels built on the back of a sustainable 62% payout ratio and $49 million free cash flow.

The small-cap agriculture-adjacent company sells a range of health products to industrial cattle, poultry, and similar operations. Most of its revenue comes from its Animal Health segment, which includes antibacterials, specialty food products, and vaccines.

The company shrugged off wider struggles in the ag sector, posting 85% sales growth and projecting end-of-year earnings to hit $0.98-$1.11 per share, with limited (as of now) tariff impacts.

A heavy reliance on international markets, with more than 50% of its total revenue from global trade, does put Phibro at risk if tariff talks break down or if retaliatory actions target livestock medication or animal food.

Still, of that global market, the smallest portion of total sales comes from the Asia-Pacific sector (8.11% of revenue), shielding it from the most contentious regional trade tax duels.

💡 Weekend Watchlist: 3 Stocks to Study

Private Prison Small-Cap Stocks

Private prisons may not be the most well-known industry for small-cap investors, but there’s no denying that the controversial sector is here to stay. Check out these three stocks during your weekend downtime to see if they’re worth adding to your portfolio.

• CoreCivic $CXW ( ▲ 1.76% ): Management expects renewed ICE funding to be a boon to business, with 21% of its current sales already derived from contracts with the Federal agency.

• GEO Group $GEO ( ▲ 2.86% ): The most well-known private prison stock, and the largest on our list at $3.7M market cap, GEO already bagged two new ICE contracts expected to generate more than $130 million annually.

• Cadre Holdings $CDRE ( ▲ 1.56% ): Downstream of private prisons themselves, Cadre manufactures security equipment for a range of clients, including Federal agencies, so it stands to benefit from wider domestic defense spending as a whole.