3 AI ETFs to Profit From the Rise of the Machines


  • AI ETFs can be a great way for investors, both large and small, to bet on the AI tailwind without having to rack up the trades.
  • Global X Artificial Intelligence & Technology ETF (AIQ): A fantastic diversified ETF with a very broad range of names spanning numerous corners of tech.
  • VanEck Robotics ETF (IBOT): Physical AI could be the “next wave” of the AI boom. If it is, IBOT is a great bet.
  • ARK Autonomous Technology & Robotics ETF (ARKQ): Those with faith in Cathie Wood should consider her robotics ETF for exposure to intriguing hand-picked names.
ai etfs - 3 AI ETFs to Profit From the Rise of the Machines

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Artificial intelligence (AI) has already begun to change the world, with powerful large language models (LLMs) like ChatGPT finding a spot on our laptops and phones. Undoubtedly, there’s no telling where the AI-driven stock market rally goes from here. As rates come down a bit, perhaps businesses and consumers everywhere will have more cash to spend on AI-related services and subscriptions. Indeed, a paid version of ChatGPT can pay itself off in more ways than one for many people!

Picking individual AI stocks will not be everybody’s cup of tea, though, especially when it comes to the skyrocketing AI semiconductor companies, many of which will eventually reverse course once expectations begin to exceed the actual results. In the meantime, nobody knows when the AI punch bowl will be taken away. It could be next week, next year, or next decade.

In light of risks, both to the upside and downside, I’d argue it’s wise for a small new investor to consider an AI exchange-traded fund (ETF). That way, you’ll reduce single-stock risk and broaden your exposure to AI. It’s not just about AI chips, folks!

Global X Artificial Intelligence & Technology ETF (AIQ)

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Global X Artificial Intelligence & Technology ETF (NASDAQ:AIQ) is a straightforward way to expose yourself to some of the most remarkable fast-movers in the AI tech scene. Shares of AIQ are up around 25% in the past year and 67% in the last two years. Pretty solid results for one of the most well-established AI ETFs on the market.

Of course, the ETF holds the AI king that is Nvidia (NASDAQ:NVDA), but it’s just one of many constituents worthy of attention and investment dollars. Other holdings include AI innovators that don’t immediately come to mind when you think of AI investing. Video streamer Netflix (NASDAQ:NFLX) is just one example of an intriguing firm within the AIQ that’s deserving of its spot. Chinese internet giants like Alibaba (NASDAQ:BABA) are another.

With around 85 holdings and a very fair 0.68% total expense ratio, AIQ is a superb choice for investors seeking broad exposure to the AI boom and big data. While not my top choice, I do find it great for beginners who seek large-cap AI exposure.

VanEck Robotics ETF (IBOT)

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As the name suggests, the VanEck Robotics ETF (NASDAQ:IBOT) is more for investors who want broad exposure to physical AI or robotics. Like the AIQ ETF, IBOT is a rather popular ETF for investors seeking a one-stop-shop sort of bet to play what may be the biggest technological revolution of our generation.

Like with AIQ, Nvidia is a top holding in the fund but comprises a far larger percentage of net assets, currently sitting at just shy of 11%. Given Nvidia’s dominance in the AI race, it’s basically a must-own for any AI ETF that seeks to maximize growth. Further, Nvidia CEO Jensen Huang believes robots could be the “next wave of AI.”

Whether it’s in the form of self-driving cars or the friendly bots that joined Jensen on stage for Nvidia presentations, I think it’s safe to say Nvidia is a must-own if you believe physical AI is the next frontier.

Apart from Nvidia, IBOT holds various industrial firms and semi-equipment makers, like ASML (NASDAQ:ASML), many of which stand to benefit from the rise of physical AI. In total, there are 67 holdings at the time of writing. And with total annual fund operating expenses at 0.47%, I’d argue you’re getting a pretty good deal from IBOT.

ARK Autonomous Technology & Robotics ETF (ARKQ)

No trio of disruptive innovation ETFs would be complete without an offering from Cathie Wood, the woman behind the Ark Invest line of funds and the ARK Autonomous Technology & Robotics ETF (NYSEARCA:ARKQ). Sure, the ARK ETFs had their day in the sun, but I think it’s a mistake to think they’ll be left in the dark for the long run, especially given the likely long-term trajectory of rates and continued innovation in the autonomous robotics front.

ARKQ shares are flat over the past year, and up 10% in the past two years—not exactly the type of exciting returns Ark shareholders are accustomed to. Looking ahead, though, things seem brighter. When you invest with Cathie, you should commit to a five-year time horizon.

That’s the horizon in mind when she forms an investment thesis. When it comes to the ARKQ, you’re getting a lot of physical AI exposure, with Tesla (NASDAQ:TSLA) topping the ETF list with an 11.2% weighting at writing. With Tesla’s robotaxi ambitions and increased automation in production facilities, Tesla may very well be the top “physical AI” stock to own.

On the date of publication, Joey Frenette did not hold (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.

Joey Frenette is a seasoned investment writer specializing in technology and consumer stocks. Contributing to the Motley Fool Canada, TipRanks, and Barchart, Joey excels in spotting mispriced stocks with long-term growth potential in a fast-paced market.

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