Barron's Streetwise - Tacos and Robots

Episode Date: March 13, 2026

The CEO of Yum Brands talks Taco Bell and KFC. A Barclays strategist looks at the coming humanoid economy. And Jack previews Nvidia’s big A.I. event. Learn more about your ad choices. Visit megaphone.fm/adchoices

How are the U.S. businesses of Philip Morris International invested in America? We're invested in advancing science, giving adults who smoke better options. We're invested in American manufacturing, helping local economies thrive. We're invested in community, supporting military veterans and their families, disaster relief, and economic empowerment. Because we're proud to be invested in America. See how at uspMI.com. We estimate about 15,000 humanoid robots were deployed in real world jobs compared that to 24 when we just saw a couple of hundred.

The four things that Taco Bell does, they have an incredibly buzzy and culturally relevant brand. Second, they have the most craveable menu in the industry. Hello and welcome to the Barron Streetwise podcast. I'm Jack Howe. And the voice you just heard, well, voice is. The first was Zornica Todorova. She leads thematic research at Barclays, and she has a fascinating report out on what she calls the trillion-dollar robot economy.

And Chris Turner is the fairly new CEO of Young Brands. That includes Taco Bell and KFC and for the moment Pizza Hut. Taco Bell had 7% same-store sales growth last quarter, or it's growing like a young chain. In a moment, we'll hear about why. What do robots and tacos have to do with each other? Nothing that I can think of. I enjoy awkward topic transitions.

If you didn't know that about me before, now you know. I'll also say just a few words about Nvidia's biggest event of the year coming up in the week ahead. Listening in is our audio producer Jackson Cantrell. Hi, Jackson. Hey, Jack. We spoke last week in this podcast about the war in Iran and the price of oil. and the potential effect in the stock market. If you're wondering why we're talking about AI and not Iran,

you can go back and listen to that episode. If you were wondering then why we were talking about Iran and not AI, well, I'll touch on it in the moment. And if you've been crying out for taco coverage, you're in for a treat. Everyone gets what they want. Jackson, do you watch, you know how people used to tune in, like it was a TV show to watch Steve Jobs and the yearly presentation of Apple's,

new gadgets. There was a while there, right? It was a big show. Oh, yeah. Do you watch NVIDIA's Jensen Wong that way? I can't say I do. I just, I know he wears a leather jacket. He does, yeah. It's like a, it's a biker jacket. It's a good look. I wrote in Barron's this past week. If he goes full trench coat like Neo from the Matrix, it's probably assigned to take profits. But we'll see. Yeah, I think the problem with Apple is now they do like four or five of them every year and I can't figure out like what's the real one and it seems like every iPhone kind of like the same as last year. I haven't watched the Apple ones in years. I mean, I don't watch them like I used to. It doesn't seem that exciting. The Invidio ones,

it's not quite like a gadget you can hold in your hand and see. It's kind of like chip architecture. So you got to be, I think, that kind of person or have that kind of interest to really get into it. Let me touch on just a few things to expect or, look out for in the NVIDIA presentation. First of all, it's called GTC. It's a weird name, I think, because GTC is an acronym that stands for GPU technology conference, but that has an acronym in it. It's like one of those Russian dolls of acronyms inside acronyms, and GPU stands for

graphics processing unit. And that's a weird name for a conference that's really all about artificial intelligence, but it does make sense. I'll explain why. The view on Wall Street, and it's a nearly unanimous view, of the 70 analysts who cover NVIDIA stock, 93% say to buy it. And the average price target implies 45% upside for the stock. So just about everyone is aligned on this. They say that Nvidia stock price is depressed. But also, if you look at it, it's up 22,000% in a decade. And it's weird to talk about something

that's up 22,000 percent as being depressed. We've talked about some weakness for AI stocks, but let's not overstate the case for Nvidia. There was one point in early February where it was down 8% for this year. More recently, it was down only 1%. It's not so much that the stock is sold off. It's really that these rip-roaring price gains

have just paused for a little while. But meanwhile, the free cash flow for the company's current fiscal year, which runs through next January, that's expected to increase by 85% to $178 billion. I have to tell you a few things, several things really, about those numbers. I know sometimes numbers that big just kind of wash over us, $178 billion. Sounds good. Let me tell you how good it is.

First of all, that growth rate would represent an acceleration from last year's growth. Invidia is growing faster, not slower. Second, the $178 billion, if you look at the low estimate and the high estimate, the difference is $98 billion. That suggests an enormous amount of uncertainty. But also, the overall consensus has been rising for months. So, forecasters are sweetening their math as new evidence comes in. New evidence like Nvidia's late February quarterly report.

Okay, let's talk about just how much money to do that. that is. Back in 22, when Russia invaded Ukraine, the oil price spiked, kind of like it has recently. That year, Saudi Aramco, that's the oil monopoly of Saudi Arabia. It generated close to $150 billion in free cash. That's still a record. This year, Aramco won't likely come close to that figure, partly because the Iran War has complicated its path to market. So if if Nvidia meets the consensus, it will become the most prosperous company ever. And yes, that does include the monopolies of antiquity like standard oil or Dutch East India if we adjust for inflation.

In fact, those are nowhere close. And if you believe the estimates, that record, $178 billion, won't last for long because next year, Nvidia is expected to smash through it hitting $233 billion. where's all this money coming from? I'll give you an example. Amazon this year is expected to burn $10 billion in cash. That's totally by choice. Up until 2023, for the few years leading up to that,

Amazon was investing somewhere between $50 and $60 billion a year. It was building out its logistics network and spending on cloud computing. But this year's spending is pegged not at $50 to $60 billion, but at $190.90 billion. And the increase has everything to do with AI infrastructure, including Nvidia chips. So a big part of the debate around Nvidia stock involves how long Amazon and others will continue to spend so much. Barklands this past week predicted that industry-wide CAPX will peak in 2008 at about a trillion dollars. And as it puts it, come down modestly thereafter. It says that consensus, 2008 estimates for hyperscalers,

like Amazon are too low by a combined $300 billion. So you can start to see why these Wall Street banks argue that Nvidia is too cheap. If we're looking at profits rather than free cash flow, the story is very similar. But investors like to look at price earnings ratios. Okay, Nvidia trades at 17 times its next fiscal year's projected earnings. And that's a discount to the S&P 500. So why is Nvidia trading at a discount if the growth is so fierce?

That's the bulk case. The bear case, I suppose, or maybe it's cautious case in the part of investors, they've just never seen numbers like this. They wonder if Nvidia can really hit these targets. They wonder if this level of spending is sustainable. So that's what they'll be looking to gather clues about at GTC in the coming week. They'll want to know about the supply outlook for critical components, things like wafers and memory and optics.

They'll want to hear about the effect of the Iran war on power costs and on demand from sovereign customers. But mostly they'll want details on future products. I should do some light stretching here, Jackson, because I'm about to get into the subject of AI computing, which is a little heavy. I think I got this. Just say Jevon's paradox a couple of times, then you'll sound smart. Are you pronouncing that right? Javon. Is that a brand of acid-washed jeans from the 80s?

I think I owned a pair back during my Sinbad look. We should have AI spin that up, and that'll be the new cover of this podcast. So AI chip spending in recent years has focused on building and optimizing models, and that's called training. In coming years, it's going to shift more towards putting those models to work and making money from them. And that's called inference. Training favors highly parallel processing. It's a lot like the processing used to render video game graphics, which explain why Nvidia, a company whose chips powered 3D shoot-em-ups like Unreal Tournament back in 1999,

came to dominate AI profits. It's why the name of that conference has an acronym that stands for another acronym that stands for graphics in part. So as recently as 2019, CPU's central processing. units. Those are chips that like Intel is best known for. Those made up the overwhelming majority of data center compute spending, 87%. GPUs, the graphics chips used now for AI, along with other AI accelerators, those made up just 13%. That was 2019. Now that has totally flipped. Last year, the AI chips accounted for 88% of compute spending at data centers. When you're doing A8,

AI training and building your models, cost is kind of an afterthought. But when it comes to inference, you want to get your business model working and cost there is key. And the computing needs for inference are more mixed than they are for training. Basically, when you type a question into your favorite AI chatbot, it turns it into tokens representing words or parts of words or punctuation. And it processes all of those tokens at once. That's a step called pre-fill. and it favors the highly parallel computing of GPUs. But the answers come a token at a time.

It's a little like speaking where each word builds on the last. That step is called decode, and CPUs can excel at that kind of sequential computing. That's one reason they're becoming more important in AI. But what you'd really like to have are purpose-built chips that can handle decode cheaply and efficiently without, for example, the need for pricey off-chip memory. There's a privately held company called GROC that specializes in just such chips

called LPUs or language processing units. And last year, NVIDIA paid about $20 billion to license GROC's technology and acquire its talent. So in the week ahead, look for NVIDIA to discuss how GROC LPUs will help Vivida broaden and customize its future chip portfolio to address training and pre-fill and decode. That could help the company hold market share with hyperscalers that can produce their own chips. UBS is bullish on Nvidia stock. It calls a breakout of the stock based on some thesis-altering commentary at GTC, hard to see.

But it also calls the contrast between its rapturous Nvidia earnings estimates, and the stock's discount valuation, quote, seemingly unsustainable. GTC will kick off on Monday with a keynote address by Nvidia co-founder Jensen Wong. He, of course, has been on the podcast. Is there a statute of limitations that runs out in the amount of time I can mention that, Jackson, or I can just keep saying it forever? I think you can say it forever. Maybe Jensen's address will shed some light on whether Wall Street has it right,

that investors are too cautious or investors have it right that it's time for a pause. And it's not time for a pause here because we're going to talk about which is it, Jackson, Tacos or robots? Robots first, right? It's robots first. I'm looking at this Nvidia lineup for, is it Wednesday, Thursday? March 16th. It's for the agenda. The agenda.

Yes. I'm looking at the. What's catching your eye? I'm just realizing how out of my depth I am here. I don't understand any of this. There's the release of the Nemotron 3-Hiber Momba transformer M-O-E for agents. Yes. Wear your safety goggles for that one.

This one's about Nvidia G-Force R-TX, which powers the world's fastest GPUs and enjoys beautiful ray tracing AI-powered DLSS in your own living room. That's actually, you're going to think I'm making this up. It's a foot massager. It's a really high-ed foot massager. Let's get to my recent conversations. And you know what? Let's go tacos first. Let's get crazy.

All right. We can do that. Yum brands. They have a new CEO since last year, Chris Turner. This is not a turnaround CEO. This is a company that's doing well. You don't hire Chris Turner if you want to do a turnaround. It's too.

It's too on the nose. Yeah. It's a good point. It's probably in his contract. I wanted to know a few things about Yum. Why is Taco Bell suddenly doing so well in the U.S.? I remember this chain from when I was a young man. This is a place you could get stuffed for like two or three bucks.

It's popular today with young people, and I'm not sure that's the reason. I wanted to hear about that. I wanted to hear about KFC's growth overseas. And Yum is exploring its options for Pizza Hut. This is at a time when a couple of Wall Street banks have recently sounded some very bullish notes on Domino. So I just wonder what's happening with Pizza Hut. Let's get to our conversation.

Let's talk tacos to start. Taco Bell. This was, I'm a 53-year-old man. When I was in college, this is a place where you could get stuff for 59 cents on their value menu. So you could walk in the door with $2 in your pocket and get full. If you had $3, you could get stuffed. But the other day, my teenage daughter asked me, she wants to go to Taco Bell. She's a Chipotle regular, and lately I hear if she's interested in Taco Bell.

How do you make this brand relevant to young people today? How is she hearing about you? I think Taco Bell does four things incredibly well, and that's why they're winning. Last year, they had 7% same store sales growth in the U.S. on the full year basis. That's many points ahead of the category. They took a lot of share. That's like a young chain.

That's not like a however many decades old chain. It is. But the four things that Taco Bell does, they have an incredibly buzzy and culturally relevant brand through our marketing. Second, they have the most craveable menu in the industry. You and I crave those classic favorites. We have an incredible catalog of favorites we can bring back, but we are also always bringing new innovation to market. Third, we have the most convenient experience in QSR.

Taco Bell, it's an easy experience through the drive-through or to get delivered or to pick up in the restaurant. And then fourth, always Taco Bell stands for value. And you can get incredible value, whether it's in one of our Lux cravings meals or on the Lux value menu. She's definitely not going for the value because I'm paying. You run a franchise model and you have people out there who run your Taco Bell locations for you and you collect royalties. What's the pitch for someone who comes to you, comes to talk to you interested in that?

What do the economics look like for them? What does that job look like? Why is someone eager to become a Taco Bell entrepreneur? The Taco Bell economics are tremendous. If you look at the company restaurants that we operate, the operating profit on those company-owned Taco Bells is in the 24% range. So just tremendous profitability while delivering that value to consumers. For our franchise partners, they do an excellent job. Of course, they deploy their capital to build these restaurants. They've gotten strong returns over the years. And of course, they're aligned with us.

us on continuing to drive growth in the system. It's a very logical plan where we're adding more and more use occasions for consumers to connect with us. So a consumer who's looking for a little more elevated product, for example, could buy the cantina chicken product, which is a tremendous set of items that we have that have an elevated, slow-roasted chicken product, more vegetables. If consumers want to buy more beverages from us, that's a big growth area in the restaurant space right now. We have experienced. expanded our beverage lineup in restaurants to include things like refreshkas. We've also launched Livmas Cafe.

We now have more than 30 Live Moss Cafe's open, and that's where we renovate the front of house to provide a bar where we can do customized, crafted beverages for our consumers. So lots of growth plans ahead for us and our franchise partners to continue to build this business. Tell me now about chicken, about KFC. I understand this is the fast grower overseas. tell me what the trajectory is there, how you're growing there. And also touch on, as an American, when I hear about companies that are expanding in China,

I always think to myself, sometimes we have trade tensions, political tensions, so forth. How does a company that's expanding in China stay safe from those kind of things? Yeah, if you think about the KFC business, it's our largest brand. Almost 90% of the business is outside the U.S. And so it is an incredibly global business operates in more than a, 150 markets. And KFC is known for unit development. So opening new restaurants. I always say that if you're a consumer on the planet, you're not a vegetarian, you've probably had fried chicken, and you've probably loved it. And of course, KFC has the best fried chicken in the business.

And the brand is so extensible in any market around the globe. In fact, we open a new KFC somewhere in the world every three hours. The China business is a big, part of KFC. We have a tremendous business there. It's been growing for many years. Back in 2016, Yom had a change to its business model. We call it the Yom transformation. A big part of that was spinning the China business out. Yom used to own many of those restaurants in China. We spun that out to be its own standalone company called Yom China, listed on the New York Stock Exchange. They are our largest partner. We collect a royalty. It's one of of the lowest royalty rates in the world there. So we still have exposure to that market and exposure

to the tremendous growth there. But there's now an amazing leadership team at Yum China that drives that business. They have tremendous focus on it. And they, of course, are focused on continuing to drive growth in that vibrant market. You're exploring your options for Pizza Hut. What are your thoughts about Pizza Hut? Why are you looking at these different choices for what to do with it? The Pizza Hut brand is a wonderful brand. I love the Pizza Hut brand. I'm, you're married to my high school sweetheart. We had our first date in a Pizza Hut restaurant back in the early 90s, so I have a long connection to the Pizza Hut brand.

Access to affordable credit helps me pay my employees that I don't really need it. Infliction is killing me. But who cares? Big retailers are making record profits. That's why we support the Durbin Marshall credit card bill. See, banks and credit unions help small businesses make payroll. This bill would cut the vital resources they need. while increasing megastore profits.

They deserve it, don't they? Tell Congress, stop the Durban Marshall money grab for corporate megastores, paid for by the Electronic Payments Coalition. The reason we're exploring strategic options is because it has been growing more slowly than the rest of the portfolio. We think it needs to be put on a different trajectory. Part of that will be exploring, hey, would it be better for some of that work to be done outside of Yom with another capital partner?

There may be elements of the transformation plan that are better, done outside of the public spotlight, but it's all in the interest of what's right for the brand, what's right for our franchise partners, and what's right for Yum Shareholders. Whenever I talk with a food CEO, I'm always on a lookout for these weight loss meds. The shots that people are taking and they don't feel as hungry and they don't eat as much. Do you folks talk about that? Is that relevant for you or it's just not a factor at this point? You know, anything that is affecting consumers is relevant for us. In fact, about a decade ago, YUM acquired a company called Collider. We still keep it separate, rated a bit inside of YUM,

but it is a consumer insights engine, a team of experts there who are constantly staying in touch with the consumer. Anytime we see something on the horizon that might affect consumer behavior, they go and research it. We've been researching the weight loss drugs that you mentioned for multiple years now. And, you know, our view is we want to provide consumers the choices and options that they seek. If you think about a business like the Taco Bell, business. You have the veggie cravings menu. If you want to get vegetarian versions of the Taco Bell items, you just hit a button on the app and you've got them. Taco Bell has lots of snackable items. So someone who wants to build a meal with smaller items can do that with great

value on the Taco Bell menu. A chicken, of course, is a preferred protein today for consumers around the globe. So all of that helps to provide a broad range of options. And that's just one piece of what helps us continue to grow and continue to be incredibly resilient. Thank you, Chris. Let's take a quick break. Welcome back and hear from Zornica at Barclays about robots. Welcome back. I'm fascinated by this topic of humanoid robots.

The fact that like Tesla, for example, is so all in that it doesn't even talk about selling cars anymore. It's all robocars and humanoid robots. Like the private ownership of, you know, two arms, two legs, C3PO type robots. I have a hard time imagining it, but that's what people say. Do you ever watch the videos that the Chinese government puts out on their robot demos? Yeah, they're way ahead, right? They have kids doing Kung Fu against robots. I don't know if you saw the recent one.

I would start with the robots doing Kung Fu against each other. Leave the children out of it. But, okay, I'm not trying to tell China how to do robots. I just think like I'm a little over half a century old. So I wonder when I'm in my golden years, if I'm going to have a robot helper around the house, like we used to see in science fiction movies. There was a guy who came to the house, what was it, five years ago.

He wanted to automate my lights and my blinds. And he said, it was like, I think it was $50,000 or $70,000, something like that so that I could push a button and that would make the lights go on and off in the blind. And I talked to myself, what do I have kids for? But as soon as they spent $50,000, I'll ask my boy to go turn off the lights, right? But now maybe one day I'll have a robot who can do that for me. That is, I'm sure, not the best and highest use case for these things.

I'm not a futurist. But let me introduce you to someone who can talk about our robot future. Zornica Todorova is the head of thematic research at Barclays. She's done a lot of research recently on robots, not just humanoid robots, but self-driving cars and factory robots and so on. And I wanted to hear more about what's coming and how quickly and how it might change society and how far ahead China is and what are our chances of catching up. Let's get to that conversation.

I asked Zornica how she got into robots. I actually trained to become a logistics engineer to arrange containers in a container ship. Sounds horribly boring, but it's actually very, very tricky to do that. So that like the weight is balanced. And then I moved into finance and people were very disappointed with me. And then I went into academia and then people said, oh, you just stay in academia, don't go to the private sector. And I did.

And yeah, I'm happy with my choice. We're happy you're here to explain to us the robot revolution that's coming. I saw a forecast for a trillion-dollar robot economy by 2035. That's not that far from now. I mean, I'll still be wearing the same clothes by 2035. We'll have a trillion-dollar robot economy. What shape is that going to take? What kind of robots are we talking about?

And what will that look like? So that trillion-dollar estimate spans actually four key robotics category. So it's autonomous vehicles, humanoid robots, autonomous drones, and advanced industrial automation. So I could see how autonomous vehicles are going to lead the trend and lead the shift. And in fact, nearly half of the growth that we project for 2035 comes from autonomous vehicle. So that's about $500 billion. I think that intuitively it makes a lot of sense because autonomous vehicles have been around for nearly a decade now. The technology is more mature, but more

importantly, there is a lot of data that these systems can use for their AI models. And that's a very different story when I compare where this technology is to where humanoid robots are at the moment. So I think for humanoid robots, the growth potential is enormous, but I think it's just going to take us a bit longer until the technology is mature enough to be really useful. And the challenge at the moment is somewhat paradoxically lack of data. The forecast for humanoid robots in particular are all over the map. I see they're going to be standing next to us tomorrow in our homes versus no, it's not going to happen. It's decades away. And so that has to be, by the way, when we say humanoid robot, we mean something that has the form of a human being. Like for people my age,

in Star Wars, you have C3PO and R2D2. We're talking about a C-3PO. We're talking about arms and legs, not the little guy on the wheels. Is it a sure thing that we're going to reach a time, let's say, in the next couple of decades, where we have these humanoid assistance in our homes? I mean, are we on an inevitable path toward that? I think so. We estimate about 15,000 humanoid robots were deployed in real-world jobs.

So now that might not sound they impressive and doesn't move the needle too much, but compared that to 2024, when we're just... so a couple of hundreds. So the rate of change is really exponential. And out of these 15,000 humanoid robots, most of them, like 80 to 90 percent of them have been deployed in manufacturing, in logistics, and warehousing. And at the moment, what they're doing is what I call simple, repetitive, and very tedious tasks. So there's a very well-organized, very well-structured tasks, like lifting boxes off of the assembly line or sorting packages in the distribution center. And I think as the technology matures, as it get better, as the humanoid robots are able to read context better, I think we'll see them engaged in more complex tasks.

And ultimately, maybe that's for the 2040s, is when we see them in our homes, assisting us with the laundry, helping us clean the house, do the dishes. 2040. Is that what you said? That's when they'll be helping us in our homes? 2040. I know that this is the smallest part for now of the robot economy, but it has to be the one that people are most fascinated with. I mean, tell me about just one or two kind of gee whiz things that you've seen, where you looked at a robot that someone's made or maybe it's a test unit and you said, wow, I didn't know that we were this far along yet. This is really fascinating. What have you been impressed with that you've seen out there that robots can do now? When I think about this technology, I think the most complicated part of the robot is how do you design robotic hands that resemble the dexterity that we have in humans? because we are extremely efficient. We are very dexterous.

We know exactly what we have to do. We have this inborn intelligence. But for a humanoid robot, it's a very different story because you need to teach that machine every single thing. So from where I stand, I'm not as impressed with robots doing backflips. Look, I think this is very impressive for sure. But I don't think it helps us that much in our daily life and it doesn't make them useful in commercial settings.

But if the hands are they dexterous, then this is a game changer. And I think some of the new models that come out of China, that come out of the U.S., I think these are really, really impressive because they have almost human-level dexterity, and this means that you can put them to work on assembly lines, and they can do really very complicated tasks for which until now you've just needed humans. And if we are able to tackle that part of the challenge, I think a humanoid robot is actually a very effective proposition to solve many of our troubles. My son just asked me, why are the robots going to be shaped like humans?

Why wouldn't they have eight arms instead of two? I said, I don't know. I think you've got to save something for an upsell. Like after they buy the two-arm unit, you can add more arms for an extra charge, probably. I don't know. I want to ask you about these four pillars. You have this fascinating report that you put out on the future robot economy. And the pillars that you mention, you call them brains, brawn, batteries, and enablers.

what are, is there one of these right now that's the constraint? I gather that they all have to work together for this future robot economy to come to fruition. Where are the bottlenecks right now? So I would say that the bottleneck right now is maybe in the Braun category, because I hear a lot of people speak about brains, and that's important, right? We need the same is, we need the right kind of compute, the software stack. It needs to be designed appropriately. The sensors matter.

But I think it's really the brawn way. see the biggest challenges right now. And the challenge is how do we scale production? Because Braun is basically all of these physical tiny components like screws and bolts and actuators that make the connection between the software and the physical world. Because when a robot is deployed on a factory floor, it's much more about the loss of physics and mechanics than it is about software. And so figuring that out is very important.

we estimate actually that about 50% of the unit build costs for humanoid robots is associated with the broad component. And I think the interesting part is that we don't need to reinvent that from scratch. There are many companies that are producing components right now, and they actually sit very tightly embedded in the automotive supply chain. So at a high level, you can think about a humanoid robot as a car in a miniature. You need the same type of physical components. you need the same level of complexity and the large number of suppliers that need to work together.

But everything is tinier and is slightly more complex. But kind of the building blocks are there. Let's talk about China. You can buy an entire exchange traded funds or mutual funds that are filled with humanoid robot-specific manufacturers. There's a whole big economy there focused on developing these humanoid robots. You write here that of the 15,000 new humanoid robots, installations in 2025. China accounted for more than 85% compared with just 13% in the U.S.

That's from your report. And then one other figure here about industrial robot adoption. This is from, I think, 2004. Basically, China was 10 times, almost 10 times the number of installations is in the U.S. It seems like they're very far ahead of us in the development of these robots, and in particular the humanoid robots. Tell me more about how the competitive landscape there looks and the chances or possibility that the U.S. could catch up in the years or decades ahead. Right. I think there are two things here. So the first aspect is their nearly vertically integrated supply chain, which allows them to produce robots at a much lower price that compared to their competitors. They own the raw materials, starting from

critical rare earths to some of the physical components to the batteries. And that allows them to produce these robots at a very low price. The other part is that there is substantial government support for the robotics industry in China. This has been declared a national priority, and they're heavily investing for the future, which on the face of it might seem very surprising because labor costs in China are not as high compared to, let's say, the U.S. or the EU, but their population is aging very rapidly. So in 20 years time, it could be that they might not have in. have workers to work in manufacturing. I think that there's no denying that China leads by a wide

margin, but this doesn't mean that there's no space for other companies outside of China to lead. And I think it's somewhat surprisingly an opportunity for the EU here because of the industrial heritage. So if I go back to my example before with the Braun, 50% of the unit production cost of humanoid robots is associated with the Braun component. Europe is really the manufacturing hub when it comes to these high precision actuators. So these are the components that enable the robot to move. So nearly 15% of the global supply comes out of Germany. I was going to say, it's always Germany.

That sounds like something Germany is real good at. They are really good at it because there's just a lot of overlap between the automotive sector and the robotics because you need the same kind of suppliers and same kind of components. So I think there is an opportunity for Europe to lean on that industrial past, industrial heritage, rooted in the automotive DNA and to repurpose that for robotics going forward. So it's the early days, which we'll have to give it a couple of years to see how this plays out. But I think it will be very, very hard to catch up with China.

Help me think through the societal changes and impacts that are coming. You probably heard in the past week or two about this report that went around Wall Street from this outfit called Citrini Research. Somebody had done a sort of a fictional look back from two years from now. 2008, and they were writing at a time where there was massive layoffs and unemployment and the stock market had crashed and house prices were falling. And it had all been caused by artificial intelligence replacing white collar work. And I think that there's a lot of people think, okay, AI might be coming for that knowledge work. But, you know, I work with my hands.

And so, you know, I've got to be safe. But then when we enter a world where we have physical AI with robots that are doing these things, Boy, it seems like there's an awful lot of jobs that can be done by machines and computers that are now done by people. Is that concerning to you that we might have something like this paper we're talking about, massive unemployment and big disruption in investment markets where you think it'll be a more benign path than that? I think it will be much more benign than what this report claims. And I'd actually phrase the question somewhat differently. Yes, it's true that, you know, AI is disruptive and there will be winners and there will be losers for sure.

but there are also other jobs at the moment for which many companies and many sectors are struggling to hire. Just because workers' preferences are also changing, and that's not always necessarily due to pay. My favorite example here is looking at where the young, the new workers that are entering the labor force right now want to work. And I read a very interesting survey a couple of weeks ago, which said that about 60% of Gen Z workers want to be social media influences. Now, take this with a grain of salt, right? Right? Somebody has to be left to be influenced by all the influencers, right? I mean, we can't all be influencing each other. But all right, go ahead.

Yeah. What I wanted to say is that I think it shows in the direction of travel that the young workers want to be in flexible jobs that are value creating, that are interesting, that are flexible. So 60% want to be social media influences. Now, 14% of them see themselves ever working in manufacturing. And I think this is a big problem because the world around us is manufactured. So we would need these jobs going forward more than ever. But the new workers, they don't want to do them.

And I think that this creates a bit of a structural mismatch between the supply of labor and demand of labor. And I think that humanoid robots and physical AI in general could be a solution to this problem. I'm not saying it's not going to be disruptive, but I think that the discussion is much, much broader than that. Thank you, Zornica from Barclays, and thank you, Chris, from Yum. And thank you all for listening. Jackson, do we miss anything? Anything we need to add?

Yeah, I'm looking at a list by People magazine titled The Most Outrageous Taco Bill menu items of all time. Give me numbers three, two, and one. Let's go in order of ascending craziness. Well, there's the French toast Chalupa, which is a little strange. That's number three. It looks like a taco where the taco is French toast and it's filled with bacon and eggs. I feel like that's not crazy if you do it in your own kitchen. Go ahead.

Number two. It's also, this is a combo one. It's the naked chicken chalupa and naked chicken chips. And it's just a. It's just a crazy name, right? The tortilla is just chicken. And the tortilla chips are just chicken, like thin. It's chicken and chicken.

And chips. Yeah, yeah. You're putting chicken in a fried chicken shell. Okay. I didn't know why naked had to get involved there, but okay. Number one? The Kit Kat Chocoladea. You took it way too far.

It's the innovation team. They're not afraid to take some swings, and I respect them for that. If you have a question, you'd like played and answered on the podcast, send it in. It could be in a future episode. Just use the voice memo app on your phone and send it to jack.com. That's h-o-ug-g-h at Barrens.com. And you can subscribe to the podcast and Apple Podcasts, or wherever you listen to podcasts.

If you listen on Apple, write us a review. If you have a taco idea, you're probably better off sending that to Chris at Yum. Don't do Kit Katz. They've tried it. See you next week. Enterprises are already creating efficiencies with agendic AI, particularly in areas like finance, HR, and IT, says Jason Gersadas, CEO of Deloitte US.

Those will continue to proliferate and strengthen. And it'll change the work that gets done. And work will increasingly be delivered through agentic capabilities. Gersadus believes the most transformative impacts of agentic systems are still to come. It will fuel innovation. It will fuel the pivot into market creation, market diversification strategies that will open up new markets to clients and to organizations who are looking for growth and looking for differentiations. access to new markets, which I think is the most exciting thing.

Visit Deloitte.com to learn how your enterprise can help successfully leverage agentic AI. The views and opinions expressed by podcast speakers and guests are solely their own and do not reflect the opinions of Deloitte or its personnel, nor does Deloitte advocate or endorse any individuals or entities featured on the episodes. Custom content from WS.J is a unit of the Wall Street Journal advertising department. The Wall Street Journal News Organization was not involved in the creation of this content.