Physical AI drives reshoring and defense growth with Pentagon's $55B autonomy budget surge

The physical AI sector, including autonomous robots, drones, and eVTOL vehicles, is fueling a major industrial reshoring trend in the U.S., Europe, and Japan. The Pentagon's autonomy budget has jumped from $250 million to $55 billion, with $14 billion dedicated to unmanned systems, supporting stable growth in defense-related AI technologies. Japanese industrial robotics leaders like Fanuc, Mitsubishi Electric, and Yaskawa are benefiting from this trend, reaching multi-year highs as reshoring boosts demand for automated manufacturing. Meanwhile, Chinese companies face challenges despite pushing into robotics and flying cars, highlighting regional competitive shifts in physical AI markets.