TNB Tech Minute: VC Firms Turn From Software Bets to Physical Ones

2026-05-29 · Source: WSJ Tech News Briefing · Field: Technology & Digital — Artificial Intelligence & Machine Learning, Robotics & Autonomous Systems, Emerging Technologies & Innovation · Depth: Fundamental Awareness, quick

Summary

Venture capital firms in Silicon Valley are increasingly shifting investments from traditional software to physical technologies and materials, driven by a search for resilient bets amidst the "AI reckoning." PitchBook data shows global robotics and physical AI investments surged to \$26 billion last year, up from \$4.2 billion in 2019, with over \$23 billion already raised this year as of May 20th. Concurrently, Chinese automaker BYD unveiled an autonomous driving chip, now in mass production, and plans to invest \$14.75 billion in intelligent technology R&D over three years, joining competitors like NIO, LiAuto, and XPeng in developing in-house chips. Separately, shares of space companies, including AST SpaceMobile, Voyager Technologies, Intuitive Machines, and Rocket Lab, plummeted following a Blue Origin rocket explosion, with AST SpaceMobile closing down over 14%.

Key takeaway

For investors evaluating tech portfolios, recognize the significant shift in venture capital towards physical AI, robotics, and core infrastructure, moving away from pure software plays. This trend suggests a re-evaluation of long-term growth sectors, emphasizing tangible assets and proprietary hardware. Consider diversifying your holdings into companies developing foundational AI components or physical applications, as these areas are attracting substantial capital and may offer more stable returns amidst market volatility.

Key insights

Venture capital is pivoting to physical AI and infrastructure, while automakers prioritize in-house chip development.

Principles

• VC firms seek "AI reckoning" resilient investments.
• Automakers develop proprietary autonomous chips.

In practice

• Invest in robotics and physical AI.
• Develop in-house intelligent technology.

Topics

• Venture Capital
• AI Infrastructure
• Robotics
• Autonomous Driving
• Electric Vehicles
• Space Industry

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Editorial summary, takeaway, and curation by AIssential. Original article published by WSJ Tech News Briefing.