Fears of a recession in the United States have brought the great artificial intelligence boom/bubble to shuddering halt.

The Nasdaq has dropped 10 per cent in a few weeks, the AI favourite Nvidia is down 20 per cent and on Friday, Intel, the incumbent chip maker fell 26 per cent, in one day.

On Friday it emerged that US unemployment had risen to 4.3 per cent in July, satisfying what is known as the Sahm Rule for identifying a recession: That is, a 0.5 per cent rise in the jobless rate from the low point (which was 3.5 per cent).

And over the weekend it emerged that Warren Buffett had sold half of Berkshire Hathaway’s $US150 billion stake in Apple, and had built a defensive cash pile of $US277 billion.

Are we about to relive March 2000? That’s when the dot.com bubble burst, and the Nasdaq fell 77 per cent over two and a half years, causing a nasty recession.

I don’t know about that, but in the long term it doesn’t matter.

Innovation begins

The collapse of the dot.com bubble did not end the internet, or stop American tech innovation – quite the reverse.

The thing about any stockmarket bubble and bust is that a lot of investors lose money but the companies that harvested it get to keep it, and use it to develop products.

Apple’s iPod was released in 2001 and the Blackberry smartphone a year later. In 2007 Steve Jobs put them together into the iPhone and changed the world.

What will come out of the latest tech bubble and change the world?

Answer: Humanoid robots, combining AI with machines that look like, sound and behave like humans.

When I played around with a science-fiction novel on long service leave a few years ago, I prophesied that robots that looked human were banned by governments to prevent the Blade Runner problem – not being able to tell us apart.

Robotics on rise

Turns out that was one of many things wrong with my only attempt at fiction: Household robots, and probably a lot of industrial ones, are definitely going to look human, and at least 10 companies are working on making them.

Vincent Vanhoucke, senior director for robotics at Google DeepMind, says robotics is having a “ChatGPT moment”.

That’s because generative artificial intelligence (GenAI) like ChatGPT is being inserted into the robots that labs have been working on for years, turning them into humanoid creatures that can learn.

GenAI and large language models (LLMs) have been seen as different scientific disciplines, but they are now merging.

Human likeness

Why make them like humans?

Two reasons: First, our environment is built for human-shaped creatures and second, because we’ll probably be more comfortable with servants that look like people, instead of, I don’t know … dogs, or big spiders.

Actually I’m not sure about the second thing. Maybe there’ll be a market for household robots that look like spiders. After all six legs might be better than two, but it would be a niche market you’d think.

The first thing is definitely true. Jensen Huang, the CEO of AI chip maker Nvidia said recently: “The easiest robots to adapt into the world are humanoid robots, because we built the world for us.”

He also noted another powerful reason: We have more data for training them if they have the same physique as us.

Work in progress

As for what it will mean, analysts at Morgan Stanley in New York recently produced a paper titled “Humanoids: Investment Implications of Embodied AI”, in which they tried to figure out the implications of humanoid robots for the labour market.

“As of November 2023”, they wrote, “the US labour force comprised about 162 million people. At an average annual salary of $59,428, (it) is worth just shy of $10 trillion.

“According to data platform Statista, approximately 3.4 billion are employed globally. Given an average $9000 per worker annual salary, the global labour market is $30 trillion.

“In our US model, we forecast a humanoid population of 8 million units by 2040 – a $357 billion wage impact – and 63 million units by 2050 – a $3 trillion wage impact.”

Australia’s workforce is 15 million, about one-eleventh of America’s.

If Morgan Stanley’s speculation is right, and the same applies here, our “humanoid population” will be a bit less than 750,000 in 15 years and 5.7 million by 2050, more than population of Sydney.

Danger zone

That is a sobering thought, although like most science fiction it’s probably way too soon. 2001 – A Space Odyssey springs to mind.

What will these humanoid robots do, other than rise up and murder us in our beds?

Morgan Stanley’s analysts think they will do jobs that are dangerous, repetitive and boring, and jobs for which unit labour costs are high.

“Based on our top-down analysis, we reason that the sectors most likely to be early adopters of humanoids are transportation and warehousing, construction, manufacturing, agriculture and mining and health care.”

Challenges ahead

But commercialisation of humanoid robots at sufficient scale to make them affordable will have to overcome a lot of technological and social challenges.

Morgan Stanley’s analysts suggest that further refinement of precision actuators, sensors and battery capacity will be needed to increase the scope of tasks that can be executed by humanoids

Will governments get involved and regulate how they look, even if they don’t ban human-looking robots to avoid the Blade Runner problem?

Will they feel obliged to prevent sentient man-made creatures from being exploited, or enslaved? Will there be a robot Fair Work Commission?

What about robot warfare? Will it just be seen as an extension of drone warfare?

Race begins

Nevertheless, there’s a race going on for first mover advantage in the humanoid robot business.

The companies in that race that Perplexity AI knows about are: Tesla, Boston Dynamics, Agility Robotics, Figure AI, UBTECH Robotics, Engineered Arts, Hanson Robotics, Sanctuary AI, PAL Robotics and SoftBank Robotics. There are probably some more than Perplexity doesn’t know about.

Finally, while science is behind it, this is a business, and the two keys to a successful business are a product that does something useful without breaking down, and the company producing it has a margin at an acceptable price point.

As soon as one of those companies gets that right, we’ll enter the era of humanoid robots and Blade Runner will come true, and the tech bust of 2024 – if that’s what this – will be just another bad memory for investors.

Alan Kohler writes weekly for The New Daily. He is finance presenter on the ABC News and also writes for Intelligent Investor