Physical AI is the Next Frontier: Can Serve Robotics Deliver the Returns Wall Street Expects?

The Catalyst: Nvidia’s Endorsement Puts a Robot Company in the Spotlight

At this week’s CES keynote, Nvidia CEO Jensen Huang made an unexpected shout-out that sent ripples through the investment community. While discussing the trajectory of physical AI technology, Huang highlighted Serve Robotics and its autonomous sidewalk delivery robots with a simple but powerful statement: “I love these guys!” Coming from one of the most influential tech executives, this endorsement carries weight in a sector still finding its footing.

Huang’s broader message resonated louder still: “The next generation of AI is physical AI.” This wasn’t just praise—it was a declaration that the era of digital algorithms is giving way to machines that operate in the real world. For Serve Robotics, the timing couldn’t be better.

The Business Model: Can Robots Reshape Last-Mile Delivery?

Serve Robotics operates in a massive addressable market. The last-mile food delivery sector represents a $450 billion opportunity globally, with U.S. deliveries averaging 2.5 miles per order. The company’s competitive advantage? Its proprietary robots can handle this distance for approximately $1 per delivery—undercutting traditional delivery methods while improving margins.

The operational traction speaks for itself. Serve Robotics commands the largest sidewalk delivery robot fleet in the United States, currently numbering over 2,000 units. The company has partnered with major players including Uber, DoorDash, Shake Shack, 7-Eleven, Little Caesars, and Jersey Mike’s Subs. Most recently, a multiyear strategic partnership with DoorDash signals confidence in nationwide expansion.

Geographic footprint is expanding rapidly. Currently operational in Chicago, Dallas, Miami, and Los Angeles, Serve Robotics reaches over 3 million people and 1 million households. With delivery volume jumping 300% year over year and 66% quarter over quarter, the momentum appears genuine.

The Financial Picture: Growth vs. Profitability

Here’s where caution enters the narrative. In Q3, revenue reached $687,000—a 209% increase—yet operating losses ballooned to $33 million, nearly quadrupling from the prior year. The company remains deeply unprofitable, and the cash burn is substantial.

Management projects tenfold revenue growth in 2026. If achieved, this would meaningfully improve the financial outlook. However, projections and reality don’t always align, especially in capital-intensive robotics ventures.

The valuation metrics deserve scrutiny too. Serve Robotics trades at more than 400 times sales—an astronomical multiple even by growth stock standards. This pricing leaves virtually no margin for error if execution falters.

Wall Street’s Bullish Consensus—With One Major Outlier

Analyst sentiment is overwhelmingly positive. Of the seven Wall Street analysts who provided ratings in January, all seven rate the stock a buy. The average price target stands around $19, suggesting 28% upside from current levels.

But one voice stands out. Michael Latimore at Northland Capital Markets maintains a Street-high price target of $26, implying 77% potential upside through 2026. Latimore positions Serve Robotics as a top investment for the year, highlighting the company’s leadership in physical AI and multiple expansion catalysts expected throughout 2026.

The Investment Takeaway: Opportunity with Caveats

Serve Robotics represents a genuine play on the physical AI megatrend. The company has demonstrated ability to deploy at scale, secure major partnerships, and maintain growth momentum. Nvidia’s strategic involvement and Jensen Huang’s public endorsement lend credibility to the venture.

Yet profitability remains distant, losses continue to widen, and the current valuation offers little cushion. Investors with conviction on physical AI and a higher risk tolerance might consider a small, measured position. However, those seeking proven profitability and reasonable valuations should likely wait for more financial maturity before committing capital.

The robotics revolution in delivery logistics is undoubtedly coming. Whether Serve Robotics captures the lion’s share of value creation is the question investors must answer for themselves.