Physical AI has moved from promise to commercial reality, but deploying robots at scale remains the industry's central challenge, according to Citi.
The conclusion follows the bank's fourth annual Robotics and Physical AI Leadership Conference, which gathered founders, investors and operators working at the frontier of the field.
The dominant theme, Citi said, was that commercialisation has arrived but scaling remains hard.
Participants drew a clear line between the promise of physical AI models and the operational reality of deploying them in unstructured, safety-critical environments such as warehouses and factories.
Demand tailwinds are building, according to the bank.
Labour shortages, the reshoring of manufacturing to domestic markets and favourable regulation are all accelerating enterprise appetite for automation.
Set against that, significant friction points persist.
Citi flagged data scarcity, talent constraints, battery limitations and high deployment costs as the key obstacles holding back wider rollout.
The bank also drew a distinction between where investor enthusiasm sits and where returns are actually being generated.
Humanoid robots are attracting significant investment excitement, but near-term returns are being driven by purpose-built autonomous mobile robots and specialised systems.
Citi pointed to warehouse automation specialist Locus Robotics and robotic logistics firm Dexterity as examples of companies delivering measurable results today.
The distinction matters for investors weighing the hype around general-purpose humanoids against the proven economics of machines designed for specific tasks.
The conference reinforced Citi's view that physical AI is a decade-long buildout rather than an overnight revolution.
Durable value, the bank argued, will accrue to companies that own the data flywheel, meaning those whose deployed machines continuously generate the training data that improves their models.
Solving real deployment problems and meeting the highest safety standards will separate winners from the rest, Citi concluded.
