Investor Confidence Fuels Physical AI Boom
In the first half of 2026, venture capital investors poured $47.4 billion into 521 deals focused on physical AI companies, marking an 80 percent increase compared to the same period in 2025 and exceeding the previous high of $41.9 billion. At the same time, Apple announced new business terms for the European Union that will take effect on October 1, 2026, settling long‑running disputes with regulators by introducing a 5 percent Core Technology Commission and revised App Store commission tiers.
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The $47.4 billion total represents the largest half‑year inflow ever recorded for the sector, surpassing the combined totals of the previous two years. Fund managers say the appeal lies in tangible products that can generate revenue sooner than pure‑software AI ventures. Several mega‑rounds exceeded $500 million each, targeting firms that develop autonomous delivery robots and industrial inspection drones. Limited partners are increasingly allocating capital to hard‑tech funds, betting that hardware barriers will create durable competitive advantages.
What Does Apple's Fee Adjustment Mean for Developers?
Starting October 1, developers selling digital goods through the App Store in the EU will see the standard 30 percent commission reduced to 20 percent for the first €1 million of annual earnings, with a 15 percent rate applying thereafter. In addition, Apple will levy a 5 percent Core Technology Commission on apps that use its proprietary frameworks, a fee designed to cover the cost of providing system services. The company states that the changes address regulators’ concerns while preserving the security and privacy standards that users expect.
The influx of capital into physical AI is likely to accelerate product launches and spur consolidation as startups seek scale to compete with established industrial players. Meanwhile, Apple’s revised EU terms could set a precedent for other jurisdictions examining app store practices, potentially prompting similar concessions elsewhere. Both trends highlight how regulatory pressure and investor appetite are reshaping the technology landscape in 2026.
Frequently Asked Questions
What caused the 80 percent increase in VC funding for physical AI? The rise stems from stronger investor confidence in hardware‑based AI, advances in sensor and compute technology, and growing demand for automation in sectors such as logistics and manufacturing.
How will Apple’s new EU commission structure affect small developers? Small developers earning under €1 million annually will benefit from a reduced 20 percent commission on the first tier, lowering their costs compared with the previous 30 percent rate.
Will Apple’s Core Technology Commission apply to all apps sold in the EU? Only apps that utilize Apple’s proprietary frameworks will be subject to the 5 percent Core Technology Commission; other apps will pay the standard commission based on their earnings tier.
