During the past quarter, the performance of the Global X Robotics & Artificial Intelligence Thematic ETF (NASDAQ:BOTZ), which is my pick for InvestorPlace’s Best ETFs for 2019 contest, has been mixed. The stock did get off to a good start, going from $20.50 to $21.77 within a few weeks. But the correction in the markets took a toll, as BOTZ dropped to $18.80.
And as of now? It’s back to where it started.
And more volatility is expected in the AI/Robotics sector. Just some of the factors that have weighed down on the stocks include: competition, challenges of introducing new products and the U.S.-China trade war, which has disrupted global supply chains.
Despite all this, I’m still bullish on AI/Robotics. These technologies are likely to lead to leaps in progress across many industries. For example, IDC predicts that spending on AI will jump from $24 billion in 2018 to $77.6 billion by 2022 and the spending on robotics/drones will go from $115.7 billion to $210.3 billion.
In light of all this, is it any wonder that the mega tech companies like Microsoft (NASDAQ:MSFT), Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL), Amazon (NASDAQ:AMZN) and Facebook (NASDAQ:FB) consider AI to be strategic? Of course not. In fact, Alphabet’s CEO, Sundar Pichai, says his company is “AI-first.”
So then, what about the BOTZ ETF? Well, it has a portfolio of 37 stocks and the net assets come to about $1.55 billion. The average market cap is $10 billion or so.
As for some of the holdings, here’s a look:
- Intuitive Surgical (NASDAQ:ISRG): For the quarter, the shares are off about 8%. The company, which is a leader in robotic surgery systems (the flagship product is called da Vinci Surgical), posted a disappointing quarterly report. Yet ISRG is still growing at a solid pace and is getting traction with new Food and Drug Administration approvals. According to InvestorPlace’s Louis Navellier: “Because ISRG is one of the first pioneers in this sector, it has a significant competitive advantage since the barriers to entry are significant and it has built a reputation in a very conservative sector.”
- Nvidia (NASDAQ:NVDA): When it comes to AI, this company is one of the top players in the industry. Although, since September, NVDA stock has been in an agonizing downtrend, going from $281 to $151. Keep in mind that the company has had to deal with eroding business from the data center as well as the collapse of the crypto-mining category. But of course, NVDA is working hard to turn things around, such as with the $7 billion acquisition for Mellanox Technologies (NASDAQ:MLNX).
- iRobot Corporation (NASDAQ:IRBT): Yes, it was a tough quarter for the company. The shares have plunged from $119 to $92. Then again, the company reported quarterly results that fell short of Wall Street expectations. But IRBT still has maintained its full-year guidance and is looking for a lift from several new products.
Ultimately, while the BOTZ ETF might not win the best ETFs competition, I still wouldn’t call it a complete loser despite its disappointments.
Tom Taulli is the author of the upcoming book, Artificial Intelligence Basics: A Non-Technical Introduction. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.