Skip to navigationSkip to main contentSkip to right columnADVERTISEMENTJonathan GeurkinkFri, July 17, 2026 at 9:08 PM GMT+2 1 min readHyundai workers in South Korea went on a partial strike this week, concerned about exactly what the physical AI sector aims to achieve: fully automated factories that pick, pack and push packages through with little need for lights or labor.Physical AI represents a fundamental shift in warehouse automation logic. Traditional automation relies on explicit, preprogrammed rules that break down when conditions change, while physical AI systems learn from data and extrapolate to novel situations.This shift moves warehouses from static, engineered systems toward adaptive, probabilistic ones that are expected to take over a much larger share of warehouse work.And investors are taking notice. Overall VC deal count for the first half of 2026 was 21, nearly as many as the 23 transactions in all of 2025, according to our latest analyst note on the sector. Total VC funding was over $8 billion, more than twice the $3.8 billion deal value for all of 2025.Deals exceeding $1 billion are becoming more common. During that period, buzzy startups such as Physical Intelligence, SkildAI and Mytra raised capital from leading investors, including Sequoia, Eclipse and Khosla Ventures. Nvidia and other strategic investors also placed their bets.With labor as the dominant cost in warehouse operations, more investment in the category is inevitable. Wages are rising—up 12% over three years as of May 2026, per the US Bureau of Labor, and worker turnover exceeds 100% annually, according to the National Employment Law Project. Meanwhile, warehouse errors result in expensive returns and customer service calls, eroding already-narrow ecommerce margins.With Amazon recently announcing a goal of doubling products sold by 2033 without increasing its US workforce, physical AI is the only answer.This article originally appeared on PitchBook NewsTerms and Privacy PolicyEU DSA contactPrivacy & Cookie SettingsMore Info