The race to commercialise artificial intelligence is moving beyond software and into physical machines. Xpeng’s robotics division has raised more than $900 million in its first funding round, giving the business a valuation of more than $6.3 billion and highlighting the growing investor interest in embodied AI.

Unlike traditional AI systems that operate primarily through computers and cloud platforms, embodied AI aims to place intelligent software inside physical machines. Robots can use sensors, computing systems and AI models to understand their surroundings, make decisions and perform tasks in the real world.

Xpeng’s move is particularly significant because the company is already deeply involved in advanced automotive technology. Its robotics business allows the group to extend its expertise in autonomous systems, sensors, artificial intelligence and large-scale manufacturing into another emerging market.

The funding round demonstrates that investors are increasingly willing to back businesses attempting to connect AI with physical infrastructure. This could eventually influence industries ranging from logistics and manufacturing to healthcare, retail and household services.

The economics of robotics are also changing. Earlier generations of industrial robots were generally designed for highly repetitive environments and specific tasks. Newer AI-powered systems are being developed with greater flexibility, allowing machines to adapt to different surroundings and potentially perform a wider range of activities.

That flexibility creates a significant commercial opportunity, but it also introduces substantial challenges. Successful robotics companies need to combine artificial intelligence with hardware engineering, manufacturing capability, battery technology, safety systems and reliable software.

For business leaders, the Xpeng story offers an important lesson about the next phase of technology investment. AI is increasingly moving from digital products into the physical economy.

The rise in Xpeng’s robotics valuation also demonstrates how quickly investor expectations can change when a company develops a credible position in an emerging technology category. As more businesses experiment with humanoid and autonomous machines, competition for engineering talent, capital and manufacturing capacity is likely to intensify.

The broader opportunity may ultimately extend well beyond robots themselves. Companies capable of building the underlying technology platforms, sensors, software and computing infrastructure could benefit from the expansion of machine intelligence.

Xpeng’s funding therefore represents a wider shift in the technology industry: AI is no longer being developed only to generate information or automate software tasks. Increasingly, businesses are trying to give intelligent systems a physical presence in the real world.