Factual errors generated by artificial intelligence (AI) technology on everything from outer space photography to men's health trained a laser focus on AI-powered chatbots such as OpenAI's ChatGPT and Google's Bard in February.
Despite these glitches that may dim AI programs' prospects for replacing human journalists for a while, the sector is primed for disruption and investment. Microsoft Corp. (MSFT) in January extended its multibillion-dollar partnership with OpenAI, as one example.
Three top-performing artificial intelligence (AI) exchange-traded funds (ETFs) offer broad-based exposure to this fast-growing segment of the technology industry. iShares Exponential Technologies ETF, Defiance Machine Learning & Quantum Computing ETF, and ROBO Global Robotics & Automation Index ETF lead rivals in a market estimated to be valued at up to $1.6 trillion by 2030.
Key Takeaways
- News about factual errors generated by artificial intelligence (AI) programs has dimmed AI's prospects in journalism while drawing investor attention to the potential of the sector.
- The AI sector underperformed the broader market over the past year.
- Top-performing ETFs in this industry include iShares Exponential Technologies, Defiance Machine Learning & Quantum Computing, and ROBO Global Robotics & Automation Index.
- The largest holdings of each of these funds are Class A shares of SoFi Techologies Inc., Cirrus Logic Inc., and Harmonic Drive Systems Inc., respectively.
About eight distinct ETFs trading in the U.S. focus on AI, excluding inverse and leveraged funds as well as those with less than $50 million inassets under management (AUM). Measured by the Nasdaq CTA Artificial Intelligence and Robotics Index, the industry benchmark had dropped 16% compared with a 9% drop for the S&P 500 Index in the last year as of Feb. 9.
Note: Some ETFs that use AI as a tool for picking stocks are also sometimes referred to as AI ETFs. But this story focuses on ETFs targeting companies that use AI for other industries, such as robotics, automation, health care, and automobiles.
We examine the three top-performing AI ETFs below. All numbers below are as of Feb. 8.
- Performance Over One Year: -8.4%
- Expense Ratio: 0.46%
- Annual Dividend Yield: 0.70%
- Three-Month Average Daily Volume: 175,087
- Assets Under Management: $3.3 billion
- Inception Date: March 19, 2015
- Issuer: BlackRock Financial Management
XT is a large-capitalization fund that targets the Morningstar Exponential Technologies Index. It selects global stocks advancing exponential technologies that have the potential for rapid disruption of their industries, including AI. Information technology stocks make up over half of the portfolio at almost 53%, followed by healthcare and industrials.
The top holdings of XT include shares of SoFi Technologies (SOFI), an online loan refinancing company; Class A shares of Coinbase Global Inc. (COIN), operator of a leading cryptocurrency exchange; and Class A shares of Meta Platforms Inc. (META), the social media and metaverse firm.
- Performance Over One Year: -9.5%
- Expense Ratio: 0.40%
- Annual Dividend Yield: 0.45%
- Three-Month Average Daily Volume: 11,563
- Assets Under Management: $112.2 million
- Inception Date: Sept. 4, 2018
- Issuer: Defiance ETFs
QTUM is a multi-cap global fund using the BlueStar Quantum Computing and Machine Learning Index as a benchmark. Companies in the index are involved in research, development, and commercialization of quantum computing systems and materials.
The top holdings of QTUM include Cirrus Logic (CRUS), a semiconductor supplier; Class A sponsored ADRs of Baidu Inc. (BIDU), the Chinese internet services and AI company; and Class A shares of Alteryx Inc. (AYX), a data analytics software company.
- Performance Over One Year: -12.8%
- Expense Ratio: 0.95%
- Annual Dividend Yield: 0.17%
- Three-Month Average Daily Volume: 111,752
- Assets Under Management: $1.4 billion
- Inception Date: Oct. 22, 2013
- Issuer: Exchange Traded Concepts
ROBO seeks to track the ROBO Global Robotics & Automation Index, which gauges the performance of companies engaged in robotics, automation, and AI. The ETF provides exposure to companies developing intelligent systems technology capable of sensing, processing, and acting, as well as to companies that apply that technology. The ETF follows a blended strategy of investing in a mix of value and growth stocks.
The fund's top three holdings are Harmonic Drive Systems (6324:TKS), a Japanese maker of components for industrial robots, semiconductor manufacturing equipment, and other products; IPG Photonics Corp. (IPGP), a maker of fiber lasers; and Class A shares of Zebra Technologies Corp. (ZBRA), a mobile computing software and analytics company.
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FAQs
3 ETFs for the Artificial Intelligence Boom
- ARK Autonomous Technology & Robotics ETF (ARKQ)
- Robo Global Robotics and Automation Index ETF (ROBO)
- First Trust Nasdaq Artificial Intelligence and Robotics ETF (ROBT)
About AIEQ. Artificial intelligence powered ETF that utilizes IBM Watson to equal a team of 1,000 research analysts, traders and quants working around the clock. The first actively managed ETF to fully utilize artificial intelligence as a method for stock selection.
What is the fastest growing ETF? ›
Fastest Growing ETFs of 2023 (Starting AUM >$0)
| Ticker | Fund | Inflows (%) |
|---|
| NVDS | AXS 1.25X NVDA Bear Daily ETF | 610% |
| BKHY | BNY Mellon High Yield Beta ETF | 552% |
| QTJA | Innovator Growth Accelerated Plus ETF - January | 540% |
| FSIG | First Trust Limited Duration Investment Grade Corporate ETF | 488% |
16 more rowsFeb 28, 2023
Here are eight the top cloud AI companies:
- Google Cloud. Google, a leader in AI and data analytics, is on a massive AI acquisition binge, having acquired a number of AI startups in the last several years. ...
- IBM Cloud. ...
- Alibaba Cloud. ...
- Amazon Web Services (AWS) ...
- DataRobot. ...
- Baidu AI Cloud. ...
- Microsoft Azure. ...
- Salesforce.
Softbank and LPs Invest in AI
Softbank and limited partners Microsoft, Apple and Foxconn had announced the second Vision fund this year. This $108 billion funding includes a hefty $38 billion from Softbank Group alone. The series of Vision Fund has received 62% returns till date.
Does Vanguard have an AI fund? ›
Online is the quickest, easiest, and most cost-effective way to transact with Vanguard. Lower costs may mean we can pass more savings on to you. Global X Robotics & Artificial Intelligence ETF is offered by prospectus only.
What ETF does Tesla follow? ›
ETF.com Insight
The largest ETF holder of TSLA is the Invesco QQQ Trust (QQQ), with approximately 31.70M shares. Investors may also find of interest that the ETF with the largest allocation to TSLA stock is GraniteShares 1.25x Long TSLA Daily ETF (TSL), with a portfolio weight of 125.16%.
What company is the rocket fuel of AI? ›
Wired describes deep learning as “the rocket fuel of the current AI boom.” So in other words, Tensorflow is a framework that makes it easier to build and train the deep learning models behind the explosion of artificial intelligence we're enjoying in our daily lives.
What company is dominating the AI market? ›
While the market for AI products and services is fragmented, IBM is leading the industry.
What is the smartest AI available? ›
Lucid.AI is the world's largest and most complete general knowledge base and common-sense reasoning engine.
Top 5 World's Most Advanced AI Systems | 2023
- GPT-3 (OpenAI) The first in our list is GPT-3 short for Generative Pre-trained Transformer 3 is the third series of generative language models developed by OpenAI. ...
- AlphaGo (Google DeepMind) ...
- Watson (IBM) ...
- Sophia (Hanson Robotics) ...
- Tesla Autopilot (Tesla Inc)
Top seven ETFs to buy now
| ETF | Ticker | Net Assets |
|---|
| Vanguard 500 Index Fund | (NYSEMKT:VOO) | $744.8 billion |
| Invesco QQQ Trust | (NASDAQ:QQQ) | $145.9 billion |
| Vanguard Growth Fund | (NYSEMKT:VUG) | $132.3 billion |
| Avantis Small-Cap U.S. Value ETF | (NYSEMKT:AVUV) | $4.72 billion |
3 more rowsJan 27, 2023
All data is as of February 2022.
- The Vanguard Total Stock Market ETF (VTI) Issuer: Vanguard. Assets under management: $271.6 billion. ...
- The SPDR S&P 500 ETF (SPY) Issuer: State Street Global Advisors. Assets under management: $373.3 billion. ...
- The iShares Core MSCI EAFE ETF (IEFA) Issuer: iShares.
Top 10 ETFs by 10-year Performance
| Ticker | Fund | 10-Yr Return |
|---|
| TAN | Invesco Solar ETF | 21.31% |
| QCLN | First Trust Nasdaq Clean Edge Energy Fund | 20.98% |
| VGT | Vanguard Information Technology ETF | 18.27% |
| IAI | iShares U.S. Broker-Dealers & Securities Exchanges ETF | 18.21% |
6 more rowsMusk is co-founder of OpenAI, the U.S. firm which developed the popular generative AI chatbot ChatGPT. ChatGPT “has illustrated to people just how advanced AI has become,” according to Musk.
What company is the future of AI? ›
According to recent research, the global AI Chip market is expected to grow to $49.26 billion in 2026, expanding at a CAGR of 34.6% from 2021 onwards. Some of the top firms working in AI include Microsoft Corporation (NASDAQ:MSFT), Alphabet Inc. (NASDAQ:GOOG), and Apple Inc. (NASDAQ:AAPL).
What AI company just partnered with Google? ›
Google is investing around $300 million in artificial intelligence (AI) firm Anthropic. The tech giant announced a partnership with Anthropic in a news release Friday (Feb. 3), with the companies saying the AI company chose Google as its preferred cloud provider.
Can AI make you rich? ›
Can AI make you rich? Income optimization and revenue generation becomes sustainable via AI, machine learning, robotics, and automation. Further improvement and personal skill assessment and its comparison with the competitors can make it better and ultimately the primary source to generate wealth.
Is it worth investing in AI? ›
AI stocks may be excellent long-term investments.
Whether it be machine learning, smart applications and appliances, digital assistants or autonomous vehicles, companies that aren't investing in AI products and services risk becoming obsolete.
Can AI beat the stock market? ›
Ultimately, A.I is doomed to fail at stock market prediction. Beating the stock market over time, however, is possible. The solution lies with us because we humans have an edge.
Top seven ETFs to buy now
| ETF | Ticker | Net Assets |
|---|
| Vanguard 500 Index Fund | (NYSEMKT:VOO) | $744.8 billion |
| Invesco QQQ Trust | (NASDAQ:QQQ) | $145.9 billion |
| Vanguard Growth Fund | (NYSEMKT:VUG) | $132.3 billion |
| Avantis Small-Cap U.S. Value ETF | (NYSEMKT:AVUV) | $4.72 billion |
3 more rowsJan 27, 2023
AI stocks may be excellent long-term investments.
Whether it be machine learning, smart applications and appliances, digital assistants or autonomous vehicles, companies that aren't investing in AI products and services risk becoming obsolete.
What is Vanguard's best performing ETF? ›
The largest Vanguard ETF is the Vanguard Total Stock Market ETF VTI with $281.33B in assets. In the last trailing year, the best-performing Vanguard ETF was VDE at 25.09%. The most recent ETF launched in the Vanguard space was the Vanguard Ultra-Short Bond ETF VUSB on 04/05/21.
What is the best performing ETF of all time? ›
One of those exchange-traded funds, believe it or not, is the most famous ETF of all, the SPDR S&P 500 ETF Trust (SPY). Launched on Jan. 22, 1993, SPY has risen 828.3% since its inception.
...
Top Performing ETFs Of All Time.
| Ticker | TECL |
|---|
| Fund Name | Direxion Daily Technology Bull 3x Shares |
|---|
| Inception | 12/17/2008 |
|---|
| Return % Since Inception | 3,259.93 |
|---|
14 more columnsOct 30, 2017
Equity Energy
- #1. SPDR® S&P Oil & Gas Equipment&Svcs ETF XES.
- #2. Vanguard Energy ETF VDE.
- #3. SPDR® Kensho Clean Power ETF CNRG.
Fidelity® Disruptive Automation Fund (FBOTX)
Invests in companies leading the way in automation, from industrial robotics to artificial intelligence and autonomous driving.
How to invest in Jasper AI? ›
Jasper AI is a private company and not publicly traded. If you are interested in buying or selling private company shares, you can register with Forge today for free to explore your options. Registering gives you access to one of our Private Market Specialists who can guide you through the process of buying or selling.
Does Elon Musk own OpenAI? ›
By his own admission, Musk no longer owns a stake in OpenAI. He is not on the board, nor does he control it in any way. (Musk did, however, have a relationship with OpenAI director Shivon Zilis, with whom he recently fathered twins.)
How accurate is AI stock? ›
AI can also make predictions about future events, such as changes in the stock market. These predictions can help investors decide when to buy or sell stocks. However, AI is not foolproof. Its predictions are based on reliable and accurate data, and cannot always account for unforeseen events.
Which Vanguard ETF has the highest return? ›
Vanguard S&P 500 Growth Index (VOOG)
As a result there are multiple growth-oriented Vanguard ETFs that garner the highest ratings from Refinitiv Lipper. But one that stands out is S&P 500 Growth, which has churned out an amazingly consistent 13% average annual returns over the last five and 10 years.
- The Best Vanguard ETFs of March 2023.
- Vanguard Short-Term Inflation-Protected Securities ETF (VTIP)
- Vanguard S&P 500 Index Fund ETF (VOO)
- Vanguard Emerging Markets Government Bond ETF (VWOB)
- Vanguard Value Index Fund ETF (VTV)
- Vanguard Total International Stock Index Fund ETF (VXUS)
Fidelity and Vanguard both do a good job keeping costs fairly low, but Fidelity has a slight edge overall. Both brokers charge zero commission for stock and ETF trades, but Fidelity charges $0.65 per contract on options trades, while Vanguard charges $1 per contract for customers with less than $1 million in assets.
