Ten Questions IT Services and M&A Leaders Are Asking About Physical AI
Explore how AI moving into robots, vehicles, drones and industrial machinery is opening a new services layer for IT and engineering firms. This research report from TH Global Capital sizes the opportunity, maps where demand lands first, and examines what recent M&A activity says about how physical AI capability is being priced.
Discover how service providers, strategic acquirers and financial sponsors can position for a market where integration, engineering and managed services sit between the technology and its deployment in the real world.
Key Highlights of the Report:
- What Physical AI Is, and Why It Is Accelerating Now — Physical AI combines sensing, computing and decision-making to operate in unpredictable real-world settings. Gartner forecasts that inference on trillion-parameter models will cost over 90% less by 2030 than in 2025, and projects that by 2028, five of the top ten AI companies will offer specialized physical AI products.
- Sizing the Services Opportunity — Zinnov estimates USD 300Bn in addressable services revenue by 2030, growing at roughly 20% a year, within a physical AI spend pool of USD 335–405Bn in 2025 rising to USD 850–1,050Bn by 2030. The opportunity spans three pillars: Mobility AI, Manufacturing AI and Service AI.
- Demand Drivers and Where Services Land First — Workforce shortages, fragmented AI regulation and resource strain are creating demand for automation, compliance and edge-engineering work. Gartner’s adoption timeline places logistics, warehousing and infrastructure inspection in the first one to two years, with retail, hospitality and healthcare following, and Gartner projects 80% of warehouses will use robotics or automation by 2028.
- Who Is Already Moving, and How the Work Is Sold — Capgemini, Cognizant, DXC’s Luxoft, Accenture, Tech Mahindra and L&T Technology Services all have named physical AI engagements. The report maps four delivery models, from time and materials to outcome-based pricing, and shows why revenue mix matters as much as growth.
- Why This Is an M&A Theme — Recent deals include Cognizant’s USD 1.3Bn acquisition of Belcan and Wipro’s USD 375Mn acquisition of HARMAN DTS, and several of the largest recent engineering-services transactions have been carve-outs or sponsor exits. The report sets out what that means for buyers, sellers and sponsors.
- What Physical AI Assets Are Worth — There is no dedicated physical AI multiple yet. The nearest evidenced comparables are engineering and ER&D services deals, where disclosed values cluster between roughly 1.2x and 2.6x revenue. Investec’s Q1 2026 update shows industrial software trading at 21.8x EV/EBITDA against 9.1x for engineering and systems integration, a spread of more than twelve turns, and the report outlines what sellers can build to move toward the higher end.
Why Download This Report?
Stay ahead of one of the fastest-forming opportunities in technology services. Whether you’re a services provider, strategic investor, financial sponsor or advisor, this report shows where physical AI demand is landing, how the market is being valued, and where the next wave of deal opportunity lies.
Sources – Gartner, Zinnov, PwC, Investec, Everest Group, company disclosures