Investing.com --China’s humanoid robot sector is approaching a critical test in the second half of the year, as investors shift their focus from lofty ambitions to tangible commercial adoption, according to Morgan Stanley. After a euphoric rally early this year, driven by aggressive targets, technological breakthroughs, and government support, the sector has cooled, with China’s humanoid value chain down 6% from March to July. The pullback comes as key integrators trimmed their 2025 guidance and breakthroughs have stalled. The next leg of growth hinges on whether companies can prove commercial value, Morgan Stanley analysts wrote. They expect orders to begin ramping up in the second half of the year, with robots starting to handle a broader range of tasks in industrial and commercial settings. Several near-term catalysts could shape sentiment. Tesla’s earnings call on July 23, the World AI Conference later this week, and the World Robot Conference (WRC) in Beijing from August 8–12 are seen as key events. WRC 2025 will host over 200 companies and is expected to feature over 100 new product debuts. Morgan Stanley assigns a 60% probability to a base-case scenario where a steady flow of new launches and modest adoption updates lift the China humanoid value chain by 2–5%. Investors will also watch for hardware and software advances. Innovations in robot reducers, materials like PEEK, and visual-language-action (VLA) models could improve efficiency and enable wider use. Model updates from Tesla (NASDAQ:TSLA), Figure, and Unitree will be critical indicators of progress. Morgan Stanley has also expanded its China humanoid stock list to include six new names, including iFlyTek, CATL, Azure, Hesai, Joyson, and Fortior. These companies are either developing core components like AI platforms, batteries, sensors, or partnering with robot makers such as Unitree and AgiBot. Whether integrators can turn prototypes into real orders and deployments will determine if the sector’s optimism can hold—or fade With valuations skyrocketing in 2024, many investors are uneasy putting more money into stocks. Sure, there are always opportunities in the stock market – but finding them feels more difficult now than a year ago. Unsure where to invest next? One of the best ways to discover new high-potential opportunities is to look at the top performing portfolios this year. ProPicks AI offers 6 model portfolios from Investing.com which identify the best stocks for investors to buy right now. For example, ProPicks AI found 9 overlooked stocks that jumped over 25% this year alone. The new stocks that made the monthly cut could yield enormous returns in the coming years. Is TSLA one of them?

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The humanoid robot looks mighty impressive.