Artificial intelligence (AI) has emerged as a significant growth driver for many investment portfolios in recent years. Major technology companies are investing massively in AI hardware infrastructure, creating leading players such as semiconductor designer Nvidia.
However, identifying the next big AI winner can be challenging, even with thorough research. This is where exchange-traded funds (ETFs) offer a compelling solution, providing diversified exposure to the AI landscape.
If you're looking to participate in the AI boom with a relatively small investment (around $100), here are three AI ETFs that can help you track the performance of leading companies in the field, regardless of who emerges as the ultimate leader.
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1. Global X Artificial Intelligence and Technology ETF (AIQ)
The Global X Artificial Intelligence and Technology ETF (AIQ 0.87%) stands out as a top choice for investors seeking AI exposure. It holds a diversified portfolio of approximately 90 stocks, encompassing semiconductors, data infrastructure, and software. The fund includes well-known names like Nvidia, Microsoft, and Alphabet, along with smaller, specialized companies, offering investors exposure to potentially high-growth AI companies they might otherwise overlook.
AIQ's global reach is another advantage, as it invests in both U.S. and international companies, providing broader diversification within the AI sector. The expense ratio of 0.68% is slightly higher than the average ETF (around 0.56%), but is competitive with other AI-focused funds.
The Global X Artificial Intelligence and Technology ETF has delivered strong performance, gaining 117% over the past three years, significantly outperforming the S&P 500's 63% return during the same period. While past performance is not indicative of future results, this track record highlights the potential of investing in AI-focused companies. This ETF offers a great way for investors to gain broad exposure to the AI landscape, participating in the growth of the industry as a whole.
2. Global X Robotics and Artificial Intelligence ETF (BOTZ)
The Global X Robotics and Artificial Intelligence ETF (BOTZ -0.27%) focuses on both robotics and artificial intelligence companies, with a particular emphasis on automation investments. Key holdings include Pegasystems, an automation software provider, and Intuitive Surgical, a leader in robotic-assisted surgical systems. The fund also includes exposure to top AI stocks like Nvidia.
Investing in robotics and automation alongside AI could prove to be a prudent long-term strategy. UBS projects that there will be 2 million humanoid robots in the workforce within the next decade, potentially reaching 300 million by 2050, creating an estimated market size of $1.7 trillion. This convergence of technologies is driving efficiency and innovation across various industries.
If you believe in the future of robotics, the Global X Robotics and Artificial Intelligence ETF offers a diversified approach to investing in 49 companies betting on this trend. The annual expense ratio is 0.68%, similar to the Global X Artificial Intelligence and Technology ETF.
The fund has slightly outperformed the broader market over the past three years, with a gain of approximately 68%. As the robotics industry continues to expand, this ETF presents a compelling investment opportunity.
3. iShares Future AI and Tech ETF (ARTY)
The iShares Future AI and Tech ETF (ARTY 1.91%) provides investors with access to 48 global companies involved in AI infrastructure, cloud computing, and machine learning.
Key holdings include semiconductor company Advanced Micro Devices, Arista Networks, and AI chip leader Broadcom, which recently secured a $10 billion semiconductor deal with a major client (believed to be OpenAI). In addition to its diversification across AI and tech companies, the iShares Future AI and Tech ETF has a lower expense ratio of just 0.47% annually.
While the fund has slightly underperformed the S&P 500 recently, gaining approximately 61% compared to the broader market's 63% gain over the past three years, its strong diversification and lower expense ratio make it an attractive option for investors seeking exposure to the future of artificial intelligence. The lower expense ratio can translate into higher returns over the long term, making it a cost-effective investment choice.
Ultimately, choosing the right AI ETF depends on individual investment goals and risk tolerance. Each of these ETFs offers a unique approach to capturing the growth potential of the artificial intelligence market. Understanding their holdings, expense ratios, and historical performance can help investors make informed decisions about their AI investments.
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