Physical AI is becoming one of Europe’s most exciting deeptech fields. It refers to artificial intelligence that does not just generate text, images or code, but acts in the physical world: in robotics, industrial automation, autonomous vehicles, chips, advanced materials and other hardware-driven sectors.

A recent analysis by Sifted shows how much momentum Europe already has in this space. According to the article, more than €7bn has flowed into European Physical AI startups over the past two years. From a Swiss perspective, one detail stands out: Zurich ranks second in Europe by number of Physical AI deals, with 25 deals and €241m in funding. Only London ranks ahead of Zurich.

That is remarkable. Zurich is not a startup market on the scale of London or Paris. But in Physical AI, different location factors matter: world-class technical research, strong engineering talent, proximity to industrial companies and an ecosystem that understands deeptech.

With ETH Zurich, leading robotics research, strong AI expertise and a dense network across industry, medtech, machinery and precision technology, Switzerland has exactly the ingredients Physical AI needs. This is not about building the next consumer app. It is about applications that change real-world processes: machines, production, logistics, research, mobility and medicine.

The number of deals is particularly interesting. London may be far ahead in total funding, but Zurich’s deal count shows that something broader is emerging: not just research, not just a few standout companies, but a real Physical AI startup ecosystem.

For Switzerland, Physical AI could become more important than classic software or consumer AI. The country is not necessarily the obvious place to build massive consumer platforms. Its strength lies where AI meets engineering, precision and industrial application.

That is the opportunity: the most exciting Swiss AI startups of the coming years may not come from yet another chatbot app, but from the intersection of artificial intelligence and the real world.