What Is Physical AI, and What Does It Mean for Government?

Physical AI refers to AI systems that operate in and interact with the physical world through robots, autonomous vehicles, sensors, and edge devices. Driven by advances in generative AI, foundation models, computer vision, and cheaper hardware, physical AI is moving from digital environments into real-world automation. Key industry perspectives from IBM, NVIDIA, Citigroup, and Deloitte highlight that 41% of companies expect physical AI impact within three years. For government, a BCG study notes that while 88% of US state leaders see AI as crucial to economic competitiveness, fewer than 10% have a well-defined strategy in place.