Domain Expertise

Physical AI development is fragmented. While giants like OpenAI focus on large models, Hitachi and Siemens champion domain expertise. Hitachi’s approach emphasizes foundational understanding of physics and industrial equipment, citing projects with Daikin and JR East as proof of concept. Their R&D also targets accelerating software development and ensuring safety through integrated design. Hitachi Vantara is also leveraging NVIDIA hardware for advanced digital twins, aiming to create robust physical AI systems.

Thoma Bravo co-founder Orlando Bravo sees the software sector as undervalued, particularly due to a lack of profitability. He notes that many public software companies rely on revenue multiples, which he considers risky. Bravo believes companies with deep, decades-long domain expertise are currently trading at attractive valuations, especially as AI integration highlights the value of this specialized knowledge. While acknowledging AI’s progress, he stresses that it cannot fully replace human R&D expertise in developing complex enterprise solutions.