Wall Street Sees a Multibillion-Dollar Humanoid Robot Market. These 2 Suppliers Get Paid Either Way.

The humanoid robot market is booming. One report by Global Growth Insights says the market was worth $2.3 billion in 2025 and will reach $43.8 billion by 2035, a compound annual growth rate (CAGR) of 35.18%.

Instead of investing in robot makers, the quicker and more predictable play right now is to invest in companies that supply components to them.

Chinese manufacturer Hesai Group (NASDAQ: HSAI) and U.S. motion and control technologies maker Parker-Hannifin (NYSE: PH) are already seeing double-digit earnings growth, thanks in part to their crucial roles in supplying parts needed for humanoid robots. Hesai, among other things, makes the lidar (light detection and ranging) that robots need to precisely measure distance and operate in low light. Parker-Hannifin makes components that drive movement, enable joint articulation, and distribute fluid and power for robots.

Neither stock is soaring in 2026, with Hesai's shares down nearly 17% and Parker-Hannifin up roughly 9%. Here's what makes each of these stocks a buy right now.

Image source: Getty Images.

Hesai's scale gives it an advantage over competitors

Hesai is a global leader in high-performance 3D lidar systems. Cameras provide visual context, but lidar gives humanoid robots millimeter-accurate depth perception that works in complete darkness, bright glare, and other environments. As robot developers prioritize safety and spatial navigation, Hesai provides direct leverage to the rapid adoption of physical sensor hardware.

Unlike smaller lidar start-ups that struggle with unit economics, Hesai has established a huge production scale through its advanced driver assistance systems (ADAS) and industrial robotics lines. By miniaturizing laser components onto custom silicon chips, Hesai dramatically lowers manufacturing costs per sensor, giving it a structural pricing advantage as humanoid robot manufacturers demand low-cost, mass-producible components.

In the second quarter, Hesai saw significant gains with 142,371 units shipped, up 193% from the same period a year ago, compared with a 60% increase in automotive ADAS lidar shipments.

Strong financial fundamentals for Hesai

In the second quarter, Hesai reported revenue of 860.8 million yuan ($128.3 million), an increase of 21.9% year over year, driven by a combination of rapid delivery scaling, proprietary technology integration, and expansion beyond automotive markets. It had net income of $10.5 million, up 60% from the same period last year, marking the fifth consecutive quarter the company has been profitable.

The company has expanded its top-line revenue without a linear spike in operating expenses by using artificial intelligence (AI) tools across engineering and automated, high-yield manufacturing lines to manage research and development costs.

Parker-Hannifin has a deep moat

Parker-Hannifin is an established global leader in precision electromechanical actuators, servo drives, planetary gearheads, and hydraulic systems, the crucial physical hardware that powers humanoid joints, limbs, and motion control. Instead of betting on which humanoid manufacturer wins the market race, buying Parker gives you broad exposure to whichever robot makers scale up production, as almost all depend on motion control suppliers.

The company's parts in its aerospace and diversified industrial segments are technical and highly specialized. Companies that deal with Parker-Hannifin tend to stay with the company because of the high switching costs of going to another manufacturer.

In the company's fiscal fourth quarter, it reported a record $5.8 billion in revenue, up 9.8% year over year. Earnings per share were $8.54, up 19% over the same quarter a year ago. Its backlog was $12.8 billion, up from $7.4 billion a year ago.

Parker-Hannifin is growing its dividend along with its free cash flow

Unlike early-stage robotics companies, Parker-Hannifin offers financial stability and operational durability. The company has increased its quarterly dividend for 70 consecutive years, including a 11% increase this year to $2 per share.

It is one of the leading Dividend Kings, a group of stocks that have raised their payouts for 50 consecutive years or more. Only American States Water, with 72 consecutive years of dividend increases, and Dover Corp., with 71 consecutive years, have a longer record of dividend growth. Parker-Hannafin has increased its payout by 215% over the past decade.

The company can afford to keep raising its dividend because its free cash flow (FCF) continues to grow. It reported a record FCF of $4.4 billion in the fourth quarter, up 15.8% year over year. This stable growth allows investors to gain long-term upside in emerging robotics technology, backed by a highly profitable, dividend-paying balance sheet.

Both stocks have promise and sidestep risks

The humanoid robot market holds long-term promise, but picking individual winners among original equipment manufacturers in such a nascent industry carries high risks. Hesai Group and Parker-Hannifin sidestep this uncertainty by providing the essential building blocks that virtually all robotics developers require to function.

Hesai's rapid scaling-up of unit volume and its structural cost leadership through custom silicon chips give it a distinct advantage as developers demand lower-cost, mass-producible perception hardware. Parker-Hannifin's high switching costs, expanding $12.8 billion backlog, and long-standing industrial moat make it an irreplaceable motion-control partner across both emerging robotics and established aerospace markets.

Backing these two suppliers provides investors with a balanced pick-and-shovel strategy to capture the upside of the physical AI revolution. Hesai offers high-upside growth as a pure-play sensor innovator expanding into high-margin non-automotive robotics.

Parker-Hannifin has defensive industrial downside protection anchored by 70 years of consecutive dividend growth and record FCF. Rather than timing the arrival of which humanoid brand reaches the mass market first, holding Hesai and Parker-Hannifin allows investors to profit from the hardware foundation that powers them all.

James Halley has positions in Parker-Hannifin. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.