American tech giants like Tesla and Nvidia are racing to develop humanoid robots, stressing their importance to the future economy. But analysts warn they are already at risk of losing out to China.

So-called humanoid robots — artificial intelligence-powered machines designed to resemble humans in appearance and movement — are expected to provide a range of use cases, such as filling industrial and service sector jobs.  

Investor excitement surrounding the robots has been mounting amid increased mentions from tech leaders like Nvidia’s Jensen Huang, who ushered in “the age of generalist robotics” earlier this month when announcing a new portfolio of technologies for humanoid robot development.

In the manufacturing of the robots themselves, Tesla’s humanoid robot project, Optimus, appears to be leading in the U.S., with CEO Elon Musk announcing plans to produce about 5,000 units this year.

While Musk’s ambitious plans could give it a leg up on U.S. competitors like Apptronik and Boston Dynamics that are yet to hit the mass market, he will face stiff competition from a familiar source: China. 

Hangzhou-based Unitree Robotics last month briefly sold two humanoid robots to consumers on the e-commerce platform JD.com, as per local media. Meanwhile, Shanghai-based robotics startup Agibot, also known as Zhiyuan Robotics, has matched Optimus’s goal to produce 5,000 robots this year, according to the South China Morning Post. 

As Chinese electric vehicle companies like BYD begin outpacing Tesla’s growth and undercutting its prices, experts say a similar dynamic could play out in humanoid robotics. 

“China has the potential to replicate its disruptive impact from the EV industry in the humanoid space. However, this time the disruption could extend far beyond a single industry, potentially transforming the labor force itself,” said Reyk Knuhtsen, analyst at SemiAnalysis, an independent research and analysis company specializing in semiconductors and AI.

For example, Unitree released its G1 humanoid robot for consumers in May with a starting price of $16,000. In comparison, Morgan Stanley estimates that the selling cost of Tesla’s Optimus Gen2 humanoid robot could be around $20,000, but only if the company is able to scale, shorten its research and development cycle, and use cost-effective components from China.

Unitree made a major splash in the robot’s space in January when 16 of its highest-performing H1 humanoid robots joined a group of human dancers to celebrate the Lunar New Year in a demonstration broadcast on national television.

But there are signs that China’s progress in robots go much further. Morgan Stanley’s February research note found that the country has led the world in patent filings mentioning “humanoid” over the past five years, with 5,688 patents compared with 1,483 from the United States.

Large players such as Xiaomi and EV makers, such as BYD, Chery, and Xpeng, are also involved in the humanoid robot space. 

“Our research suggests China continues to show the most impressive progress in humanoid robotics where startups are benefitting from established supply chains, local adoption opportunities, and strong degrees of national government support,” the note said.

Beijing has increasingly backed the space, with government departments promoting their development. In 2023, the Ministry of Industry and Information Technology issued guidelines for the space, calling for “production at scale” by 2025.

According to Ming Hsun Lee, head of Greater China automotive and industrials research at BofA Global Research, China sees humanoid robots as an important industry because of their potential to mitigate looming labor shortages. 

“I think in the short-term, three to four years, we will see humanoid robots initially applied in production lines to compare some workers, and in the midterm, we will see them gradually spread into the service industry,” he said. 

Musk predicted that he’d have over 1,000, or a few thousand, Optimus robots working at Tesla in 2025. According to Chinese state media, EV makers like BYD and Geely have already deployed some of Unitree’s humanoid robots at their factories.  

Lee said that increased adoption will coincide with a “very fast” decline in component costs, also noting that China owns around 70% of the supply chain for these components. 

According to a report by SemiAnalysis earlier this month, the Unitree G1 — “the only viable humanoid robot on the market” — is entirely decoupled from American components.

The report warns that China is the only country positioned to reap the economic awards of intelligent robotics systems, including humanoid robots, which “poses an existential threat to the US as it is outcompeted in all capacities.” 

“To catch up, U.S. players must rapidly mobilize a strong manufacturing and industrial base, whether domestically or through allied nations … For Tesla and similar firms, it may be wise to begin reshoring or ‘friendshoring’ their component sourcing and manufacturing to reduce reliance on China,” said SemiAnalysis’ Knuhtsen. 

Bank of America analysts predicted in a research note this month that the deployment of humanoid robots will accelerate rapidly, aided by the development of AI, with global annual sales reaching 1 million units by 2030 and 3 billion humanoid robots in operation by 2060. 

In November 2023, Jack Ma posted an internal memo at Alibaba, urging the e-commerce giant he helped create to “correct its course.” The message was as a rallying cry by one of China’s most prominent tech leaders to a company going through one of the most tumultuous times in its history.

Alibaba’s share price was near record lows, growth was stalling amid intensifying competition, management changes were coming thick and fast, and Beijing was still closely scrutinizing the company. Ma himself was barely in the public view.

But his message may have instilled some new hope in Alibaba — the e-commerce giant is now seeing growth in its core business and has become one of the leading artificial intelligence players in China and globally, competing with the likes of OpenAI and DeepSeek. And Alibaba is now back in favor with the Chinese government.

Alibaba’s U.S.-listed shares have quietly risen nearly 60% this year, adding more than $100 billion to the company’s valuation.

“China tech has awoken being led by Alibaba and investors globally are viewing this as the best way to way China tech … and we agree. Alibaba is in pole position to benefit from AI and cloud spend,” Dan Ives, global head of technology research at Wedbush Securities, told CNBC.

CNBC spoke to Alibaba’s chairman as well as a former executive and analysts, who painted a picture of the changes at the tech firm that have led to the start of the company’s comeback.

Alibaba’s downfall was swift. Many have credited its beginning to comments made by Ma in October 2020 where he appeared to criticize China’s financial regulator.

The comments weren’t widely picked up on. Days later, Alibaba’s share price hit a record high with its market capitalization exceeding $858 billion.

Alibaba was riding wave of successes that had seen it grow into the biggest e-commerce player in China, with international expansion on the agenda and its cloud business growing quickly. To top it all off, Alibaba affiliate Ant Group was gearing up for an initial public offering that would raise north of $34 billion, making it the biggest listing in history.

Ant Group, which was also founded by Ma, is a financial technology company that is behind Alipay, one of China’s two most prominent mobile payment systems.

Just two days before Ant Group was scheduled to list in Shanghai and Hong Kong, the IPO was canceled. At the time, Ant cited changes in China’s “regulatory environment.”

What followed was several years of intense scrutiny on Ma’s empire and China’s biggest technology companies. Regulators clamped down on practices from giants that they viewed as anticompetitive, dished out billions of dollars of fines on companies including Alibaba, forced changes to Ant Group’s structure and brought in a plethora of rules touching many areas of technology.

In March 2023, Alibaba — a sprawling company that does everything from food delivery to cloud computing and movies — decided to split into six separate business groups, each with the ability to raise outside funding and go public. Alibaba thought the move would make these units more agile.

Then came a leadership reshuffle. Alibaba announced in June 2023 that Daniel Zhang, who had been CEO since 2015 and chairman from 2019, would step down from both roles to focus on the cloud business. But just three months later, Zhang suddenly quit the cloud unit.

Eddie Wu, a co-founder of Alibaba, took over as CEO and the head of cloud. Joe Tsai, another co-founder, stepped up to take on the role of chairman.

That was one of the most tumultuous times in Alibaba’s history.

“During that time period a great sense of uncertainty and confusion hovered over employees. While there was a wait-and-see sort of mentality that set in, the problem was that as time passed, many didn’t know just how long that would be,” Brian Wong, a former Alibaba executive and author of “The Tao of Alibaba,” told CNBC.

“While China’s economy during the start of Covid initially remained robust, following the lock-downs everything turned and the combination of disrupted supply chains and changes in the economic climate only compounded the concerns of where all of this was headed.”

“Large companies move very slow and it’s because the decision-making structure is too complicated … So we really needed to get back to nimbleness and act fast,” Tsai said at the CNBC CONVERGE LIVE event in Singapore earlier this month, adding that quick decision-making is key to competing with startup rivals.

Tsai said that he and Wu decided the first thing they needed to do was to “streamline the company.”

“Instead of talking about Alibaba as six different business units, we talked about ourselves as having two core businesses — e-commerce and cloud computing,” Tsai said.

“That simplified everything and our communication. It’s very important that we communicate that to our employees. They need to have a simple structure in their minds in order to move faster.”

Younger people in management were also given the power to make decisions, Tsai said.

“It means that actually letting them make some decisions and letting them make mistakes and train them so that they can recover from mistakes,” Tsai added.

Wu and Tsai also scrapped plans to list Cainiao, Alibaba’s logistics arm, marking a U-turn on previous commitments.

“Eddie is winning plaudits internally for having trimmed the old and built the new. Jack [Ma] and Joe [Tsai] ultimately made the decision to bet on him and it’s paying off,” Duncan Clark, an early advisor to Alibaba and chairman of BDA, told CNBC by email.

The tightening of regulation and government scrutiny also hit investment. Billions of dollars were wiped off the value of Chinese tech companies while venture capital investment in startups plunged.

In a country where government policy and support is key for sectors and companies, Beijing’s apparent antagonism toward private business had dampened spirits in the tech sector. But as China continues to face economic headwinds, the role of the technology sector in boosting the economy is back in focus.

And in February this year, Chinese President Xi Jinping held a rare meeting with entrepreneurs urging them to “show their talents,” in comments seen as giving support to private businesses.

Alibaba’s Ma, among other top Chinese CEOs and founders, were present at that gathering. Ma’s attendance was particularly interesting, given that his empire was under the microscope over the last few years and he had not been seen with China’s political elite for some time.

“Xi’s meeting with Jack Ma also sent out a very clear signal on where the Chinese government’s priorities are at the moment – AI development and the growth of private enterprises are clearly important to China’s economic growth, and we also believe that Alibaba has the support of the Chinese authorities,” Chelsey Tam, senior equity analyst at Morningstar, told CNBC by email.

The meeting has helped Alibaba’s share price this year. And it appears to have also instilled new confidence in Alibaba to hire and invest.

“It gave us the confidence … to put our earnings back into capex [capital expenditure] and investments and also hire people,” Alibaba’s Tsai said, referencing a more than $50 billion investment in AI infrastructure over the next three years that the company announced in February.

Alibaba is among China’s leaders, and in 2023, not long after ChatGPT made a splash, the company launched its first AI model called Tongyi Qianwen, or Qwen. The Hangzhou-headquartered company has since aggressively launched numerous models that allow tasks such as video, text and image generation from user prompts.

Alibaba has made its models open source, meaning anyone can download them and build upon them. This has been key to its success. Some of the most popular models on Hugging Face, a global repository of AI models, are built on Qwen.

“Alibaba has been consistently releasing high-impact open source models on Hugging Face since early 2023,” Tiezhen Wang, a machine learning engineer at Hugging Face, told CNBC.

Wang said Alibaba’s models, which cover features like video, image and text generation, “deliver strong performance across tasks.”

While Alibaba was early in the AI model game, it was the release of a research paper from Chinese firm DeepSeek this year that forced all eyes to focus on what was going on in China. DeepSeek claimed its AI model was trained at a fraction of the cost of leading AI players and on less-advanced Nvidia chips, leading to a global stock sell-off.

“DeepSeek was a wake up call that China tech is not just sitting idle on AI and this indirectly benefits Alibaba as the appetite for AI is clear in China,” Wedbush Securities’ Ives said.

Alibaba’s cloud computing business posted accelerated growth in the December quarter from the quarter before.

“The key I think now is that rather than viewing Alibaba as a losing market share [and] margin e-commerce company it can now be seen as a large cloud [and] AI company benefiting from all the new opportunities,” BDA’s Clark said.

“It’s a complete change in narrative.”

CoreWeave on Thursday priced shares at $40 in the company’s IPO, raising $1.5 billion in the biggest U.S. tech offering since 2021, CNBC has confirmed.

The company, which provides access to Nvidia graphics processing units for artificial intelligence training and workloads, had planned to sell shares for between $47 and $55 each. At the top end of the range, that would’ve valued CoreWeave at about $26.5 billion, based on Class A and Class B shares outstanding.

The offering is down from 49 million shares to 37.5 million, according to a source familiar with the matter who asked not to be named because the announcement hasn’t been made public yet. Bloomberg was first to report on the $40 price. At that level, CoreWeave’s valuation will be closer to $19 billion, though the market cap will be higher on a fully diluted basis.

Earlier on Thursday, CNBC reported that Nvidia, one of CoreWeave’s largest shareholders, was targeting a $250 million order at $40 per share.

CoreWeave’s shares are set to start trading on the Nasdaq on Friday under the ticker symbol “CRWV.”

The IPO is a major test for tech startups and the venture capital market after an extended lull in new offerings dating back to the beginning of 2022, when soaring inflation and rising interest rates pushed investors out of risky assets. Other tech-related companies that have filed to go public in recent weeks include digital health startup Hinge Health, online lender Klarna and ticketing marketplace StubHub. Bloomberg reported on Wednesday that chat app maker Discord is working on an IPO.

The last venture-backed tech company that raised at least $1 billion for a U.S. IPO was Freshworks in 2021. Last year Reddit and Rubrik each raised about $750 million in their offerings.

After Donald Trump’s election victory in November, Goldman Sachs CEO David Solomon said he expected renewed IPO activity, but President Trump’s imposition of tariffs in recent weeks added uncertainty to economic forecasts and led to increased volatility to tech stocks.

CoreWeave counts Microsoft as its biggest customer by far. Other clients include Meta, IBM and Cohere. Revenue soared more than 700% last year to almost $2 billion, but the company recorded a net loss of $863 million. CoreWeave’s model is capital intensive, requiring hefty purchases of equipment and expenditures on real estate.

A week after filing to go public, CoreWeave announced a contract with OpenAI worth up to $11.9 billion over five years. OpenAI agreed to buy $350 million in CoreWeave stock as part of the deal.

CoreWeave is trying to compete with some of the biggest tech companies in the world, including Amazon, Microsoft and Google, the three leading providers of public cloud infrastructure in the U.S.

WATCH: Nvidia will anchor CoreWeave deal at $40 per share with a $250 million order, sources say