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3 ETFs to Buy for the AI Revolution


  • The talk of Wall Street has been artificial intelligence, so it’s got investors looking for AI ETFs to buy.
  • Invesco QQQ Trust Series ETF (QQQ): This ETF has huge exposure to leading mega-cap AI names.
  • VanEck Semiconductor ETF (SMH): You can’t build AI without semiconductors, making this ETF a perfect fit.
  • Global X Autonomous And Electric Vehicles ETF (DRIV): DRIV isn’t just about cars, it’s loaded with AI stocks as well.
AI ETFs to Buy - 3 ETFs to Buy for the AI Revolution

Source: shutterstock.com/Den Rise

Artificial Intelligence (AI) has been the talk of Wall Street this year, especially when it comes to new technologies and growth avenues. AI continues to grow at an alarming rate, leaving consumers and investors scrambling to keep up. It’s got the latter group looking for AI ETFs to buy.

No one knows where the next ChatGPT will come from or when it will pop up. Since hitting the scene in November 2022, ChatGPT has blown up in popularity. It garnered millions of subscribers in record time and new platforms seem to pop up overnight.

There’s no question that AI is transforming the way that we’re using technology. It’s not a fad and it’s not going away. Rules will likely be put in place, or there will be an attempt to, but as the saying goes “the cat is out of the bag.”

So now the big question is how can investors position themselves to take advantage?

Invesco QQQ Trust Series (QQQ)

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Source: Shutterstock

I would start with the Invesco QQQ Trust Series ETF (NASDAQ:QQQ). While this ETF is hardly obscure and is one of the most popular trading vehicles in the market. It is a worthy consideration when looking for AI ETFs to buy.

Microsoft (NASDAQ:MSFT) is the top holding in QQQ, with a weighting of 12.63%. The tech giant has been positioning itself to have a great foothold in the AI space.

As soon as ChatGPT showed off its stuff, Microsoft moved quickly to make a multi-billion dollar investment in the platform’s parent company, OpenAI. Now Microsoft is working to integrate AI into its search and browser products, as well as its other platforms aimed at enterprise use.

Nvidia (NASDAQ:NVDA) is another top holding in QQQ, coming in as the fourth-largest holding. Nvidia produces the hardware that makes AI possible. While others will eventually enter its domain, Nvidia is the king of AI chips for the moment.

VanEck Semiconductor ETF (SMH)

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Another ETF where Nvidia is a top holding? The VanEck Semiconductor ETF (NASDAQ:SMH). Only in this case, Nvidia is the top holding in the fund, with a 13.66% weighting. The next largest company in the ETF is Taiwan Semiconductor (NYSE:TSM) with an 11.57% weighting.

That’s significant, as a quarter of the ETF is tied up in two stocks. More than 64% of SMH is invested in its top 10 holdings. So why am I picking this ETF? Put simply by Forbes:

“If you want investing exposure to artificial intelligence (AI) without betting on young, unproven companies, semiconductors may be your angle. Semiconductors are the building blocks of AI applications—so as AI adoption grows, so does the demand for semiconductors.”

None of this is possible without semiconductors and the strain and demand from new technology using AI applications is going to be intense. That means better chips, higher-end components and all-around stronger demand for the parts produced by semiconductor companies.

Global X Autonomous And Electric Vehicles ETF (DRIV)

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Lastly, there’s the Global X Autonomous And Electric Vehicles ETF (NASDAQ:DRIV). While the name of the fund would lead you to believe that this is simply geared toward vehicles, it’s got more AI exposure than you’d think at first glance.

First, its top holding is Nvidia. That’s followed by Tesla (NASDAQ:TSLA), Apple (NASDAQ:AAPL) and Alphabet (NASDAQ:GOOGL, NASDAQ:GOOG). While there is an electric vehicle component in there, all three companies will surely play a role in AI adoption. Alphabet is working on its own AI platform called Bard, and like Microsoft, will surely look to integrate it into its existing platforms.

Other top stocks in the fund, like Qualcomm (NASDAQ:QCOM), Intel (NASDAQ:INTC) and Microsoft, will all benefit from, and play a role in, the future of AI as well.

On the date of publication, Bret Kenwell did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell.

Article printed from InvestorPlace Media, https://investorplace.com/2023/04/3-etfs-to-buy-for-the-ai-revolution/.

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