The race to develop humanoid robots has begun. Elon Musk announced Wednesday that Tesla will stop producing two electric car models and convert its California factory to make Optimus robots. But while Tesla is trying to pick up speed, its Chinese rivals are already ramping up shipments and negotiating global partnerships in humanoid development. As a result, demand for parts is increasing. “Component suppliers will be the first to benefit from the industry’s initial growth,” Morgan Stanley analysts said in a Jan. 21 note ahead of Musk’s announcement. “Production is likely to significantly exceed sales at this stage,” investment bank analysts said. “With major companies producing robots in-house for training and validation purposes, this suggests the component market may reach scalable production sooner than previously thought.” Shanghai-listed Leader Drive, one of Morgan Stanley’s preferred stocks for human parts, closed up more than 7.5% on Friday after rising slightly on Thursday. The robotics company pre-announced late Thursday that its 2025 net profit will more than double to at least 58.8 million yuan ($8.46 million). LeaderDrive said in a filing that major customers in the “smart robot” space are moving from the research stage to small-scale production, adding that it is deepening discussions with unnamed overseas partners. “ReaderDrive is expected to benefit most from humanoids,” Morgan Stanley analysts said, predicting that 30% of the company’s revenue next year will come from robots, up from 25% in 2026 and 15% last year. Doubling forecast In January, Morgan Stanley doubled its forecast for sales of humanoid robots in China this year to 28,000 units from its December estimate of 14,000 units. Musk said at the World Economic Forum in Davos, Switzerland this month that his company plans to sell the Optimus robot to the public by the end of 2027, with plans to eventually produce 1 million humanoid robots a year. Other humanoid components stocks recommended by Morgan Stanley include Shenzhen-listed Innovance Technology. Innovance, which has a large industrial automation business, doesn’t expect humanoids to account for a large portion of its revenue this year or next, according to Morgan Stanley estimates. However, analysts point out that Innovance is developing specialized screw and linear actuator mechanical components for humanoids to capture future market potential. Linear actuators convert rotary motion into linear motion and vice versa. A Morgan Stanley report states that “humanoid robots using linear + rotational solutions are expected to be launched in stages in 2026/27 (Tesla Optimus, Xpeng Iron).” “Linear actuators tend to be more affordable, so we expect their adoption to increase in the future.” Jiangsu Hengli Hydraulics, a Shanghai-listed company specializing in screws, is also among the companies Morgan Stanley analysts expect to benefit from demand for humanoid robots. The sector already accounts for 1% of Hengri’s revenue this year, and is likely to rise to 2% next year, the report said. Despite the growing popularity of humanoids for entertainment applications such as boxing matches and technology exhibitions, the technology is still in its infancy, and it is unclear whether its development will face additional regulations for public use or which humanoid companies will survive. However, progress with Tesla’s Optimus has significantly boosted the Chinese humanoid parts company’s stock performance over the past 12 months, according to a report from Morgan Stanley. The robot parts maker is said to have been sold following reports of delays in Optimus. China’s wind information index, which includes 110 robot parts makers, fell more than 2% on Thursday before closing higher on Friday. But the index is up nearly 48% over the past 12 months, outpacing the broader market CSI300 index, which has risen about 25% over the same period.
