The Next $10 Trillion Opportunity: Why 'AI x Physical World' Is Where It's All Headed

There’s a quiet revolution underway — and it’s starting to make a lot of noise.

For years, the most ambitious minds in tech have been pouring their talent into software: messaging apps, marketplaces, productivity tools, recommendation engines. That era isn’t over — but a new one is accelerating fast. The frontier now is the real world.

AI is no longer confined to code running in the cloud for a few select technology use cases. It’s breaking out — into factories, vehicles, supply chains, energy systems, and battlefields. What we’re witnessing is the beginning of a new industrial age, powered not by steam or electricity, but by intelligence.

Self-steering cars. Autonomous trucks and taxis. Industrial robots doing real work. Drones waging modern warfare. AI systems scanning MRIs and CTs with superhuman accuracy. This is not science fiction. This is the deployment phase.

Still, some investors squint at the space and ask: How big can this really get?

Let me be blunt: unimaginably big. This is not speculative anymore — it’s visible in the numbers.

Tesla has crossed a $1 trillion market cap. Palantir is over $350 billion. Samsara, Anduril, Applied Intuition, FlockSafety, Shield AI, Saildrone, Nominal and others— these companies are worth many billions, scaling faster and deeper than most people realize. And they’re just getting started. And they all sell into industries in the physical world.

The market isn’t just large. It’s massive. While traditional enterprise software may have a $2–4 trillion global TAM, automotive alone is approaching $4 trillion. And that’s just one vertical. Add industrial automation, defense, energy, advanced materials, logistics, construction, and healthcare — and the addressable market starts to look nearly boundless. 

See chart below from Packy McCormick that highlights a few such verticals in the real world. Every single one of these sectors is now touchable by software and AI. And not in marginal ways. In fundamental, structural, generational ways. As he does, apply metrics common to those industries and you can see what sized companies can be created there. 

Even if you take conservative estimates, the scale of opportunity in AI x Physical World is orders of magnitude beyond what most venture capital has targeted over the past 20 years. Yet the capital allocated to it is still relatively small. That is a mispricing. Funds that understand this, have the required experience and knowledge-base, and are able to allocate capital appropriately, will benefit greatly.

More importantly, the founders know this. They’re not interested in building another social app or a marginal SaaS feature. They want to rewire critical infrastructure. They want to solve precision manufacturing. They want to close the loop in energy systems, automate logistics at scale, modernize defense, and push the boundaries of industrial performance.

In this new era, the “cost of intelligence” is collapsing with AI — just as the internet once collapsed the cost of communication. Intelligence is now becoming a commodity input, and founders are using it to transform the most foundational layers of the economy.

This is where the next $10 trillion of enterprise value will be created.

As investors, the question is simple: are we looking in the right places?

The AI revolution isn’t just about models. It’s about machines. About matter. About systems that see, act, and learn in the physical world. That’s where the most urgent problems are — and where the deepest returns will come from.

This is the moment to get in early. The infrastructure is being laid. The founders are already building. The markets are waking up. Don’t look back in five years wishing you had paid attention sooner.