It’s probably the hottest market for investors right now, with its size valued at more than $243 billion this year and projected to more than triple by 2030. weight to influence space, and much smaller, more nimble newcomers seeking to develop important technologies. Unfortunately, it’s also home to a surprisingly large number of firms trying to capitalize on the rapid development of AI in general, without necessarily contributing much to the industry.
For investors, AI presents a huge opportunity, but also a challenge: How do you identify promising AI stocks that haven’t yet reached their full potential? With many investors fearing an AI bubble similar to the dot-com boom of about 25 years ago could emerge, the rewards and risk are equally high.
For investors looking to hedge their bets through diversification, AI exchange-traded funds (ETFs) may present a good opportunity. These may include funds specifically focused on artificial intelligence companies, such as the Global X Robotics & Artificial Intelligence ETF. NASDAQ:BOTSas well as those related to the broader technology sector, such as the iShares Expanded Tech Sector ETF. NYSEARCA:IGMor to a critical component used in artificial intelligence applications, such as the Direxion Daily Semiconductor Bull 3x Shares ETF. NYSEARCA:SOXL.
Global X Robotics & Artificial Intelligence ETF: Target Portfolio by Price
Global X Robotics & Artificial Intelligence Thematic ETF Today
Global X Robotics and Artificial Intelligence Thematic ETF
As of 01/17/2025 16:00 Eastern
- 52 week range
- $26.60
▼
$34.26
- Dividend yield
- 0.12%
- Assets under management
- $2.62 billion
BOTZ is one of a growing number of ETFs focusing on artificial intelligence and robotics companies. With its asset base of $2.6 billion, it has a fairly high average monthly trading volume in the range of around 600,000 as of January 15, 2025. BOTZ is a focused fund with fewer than 50 assets, although aside from three or four big players each holding 10% or more of the portfolio, assets are fairly evenly distributed among the remaining names.
This fund will mainly appeal to investors looking for possible diversification by looking at both AI and robotics names, meaning some companies are not active participants in the AI space. Niche targeting comes with a fairly high fee as BOTZ has an expense ratio of 0.68%.
iShares Expanded Tech Sector ETF: Strong Performance, Broad Coverage
iShares Expanded Tech Sector ETF Today
iShares Expanded Technology Sector ETF
As of 01/17/2025 16:10 Eastern
- 52 week range
- $75.66
▼
$107.19
- Dividend yield
- 1.77%
- Assets under management
- $5.85 billion
IGM’s roughly 300 holdings make it a broad-based technology fund—while it doesn’t specialize in artificial intelligence, many of the companies in its portfolio do. The fund’s $5.7 billion in assets reflects its broad appeal, and its 0.41% fee is quite competitive, especially compared to AI-focused funds.
As of January 15, 2025, its annual performance record stood at 36.8%, slightly ahead of the broader market. One thing investors should keep in mind is that IGM holds all major technology players such as Apple Inc. NASDAQ:AAPL and Microsoft Corporation. NASDAQ: MSFT essentiallysometimes in fairly large percentages of invested assets, meaning that investors who own shares of these companies individually can skew the balance of their portfolios without meaning to.
Direxion Daily Semiconductor Bull 3x Stock ETF: A Leveraged Play for Compound Profits
Direxion Daily Semiconductors Bull 3x Stock Today
Direxion Daily Semiconductors Bull 3x
As of 01/17/2025 16:10 Eastern
- 52 week range
- $23.50
▼
$70.08
- Dividend yield
- 0.31%
- Assets under management
- $10.10 billion
SOXL is another fund that does not specifically focus on artificial intelligence companies, but is closely tied to the industry.
By offering a 3x long position in the semiconductor stock index, this fund provides an increased opportunity to increase daily returns when the semiconductor sector does well.
Semiconductors are thriving thanks to strong demand from artificial intelligence and other corners of the technology space. However, the use of leverage means that active traders make best use of this fund with a high risk tolerance.
Beware of the AI name
As funds like IGM and SOXL show, it is possible to gain exposure to a broad spectrum of the AI industry without investing in an ETF explicitly named after the AI industry. Just as there are companies looking to lure investors by referencing AI in their names and materials without actually innovating, there are ETFs looking to capitalize on this trend. Take a look at a potential AI fund’s holdings and compare them to traditional technology-focused funds like the Technology Select Sector SPDR Fund. NYSEARCA:XLK– If there is significant overlap, it may be possible to achieve similar AI impacts using a common fund with a lower expense ratio.
Before you consider the Global X Robotics & Artificial Intelligence Thematic ETF, you might want to hear this.
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While the Global X Robotics & Artificial Intelligence Thematic ETF currently has an analyst rating of “Hold”, the top-rated analysts think these five stocks are Strong Buys.
View five stocks here
Wondering where to start (or end) with AI stocks? These 10 common stocks can help investors build long-term wealth as artificial intelligence continues to advance in the future.
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