AI-themed exchange-traded funds (ETFs) are witnessing a significant surge as asset managers capitalize on the growing enthusiasm surrounding artificial intelligence. This year, over one-third of the two dozen AI-focused ETFs were launched, according to Morningstar.
What Happened: In the past week alone, three new ETFs have entered the AI sector, including one that was rebranded to specifically focus on artificial intelligence, Reuters reported on Monday. The total assets of AI ETFs have now reached $4.5 billion, approaching the $5.5 billion held by nuclear power-themed ETFs and surpassing the $1.37 billion in the cannabis sector.
Daniel Sotiroff, a senior analyst at Morningstar, remarked on the trend, stating, "I'm not surprised their ranks are multiplying."
He emphasized that the industry's rapid pace attracts investors eager for quick returns, according to the report.
As per Benzinga Pro data, here are how some of the AI-based ETFs performed over the past year:
Global X Robotics and Artificial Intelligence ETF (NASDAQ:BOTZ): BOTZ, currently with net assets worth $2.51 billion and NAV of $31.59, climbed 40.39%. Its top AI-related holdings include Nvidia Corp. (NASDAQ:NVDA) and biotech firm Intuitive Surgical Inc (NASDAQ:ISRG).
Global X Artificial Intelligence & Technology ETF (NASDAQ:AIQ): AIQ, which has $2.27 billion in net assets and $37.36 NAV, increased by 43.64%. Oracle Corp. (NYSE:ORCL), Cisco Systems Inc. (NASDAQ:CSCO), and Meta Platforms (NASDAQ:META) are some of its top AI-related holdings.
iShares US Technology ETF (NYSE:IYW): IYW gained 50.72% in the past year. The ETF has an NAV of $155.42 and $19.24 billion in net assets. It also gives exposure to tech stocks like Apple Inc. (NASDAQ:AAPL), Nvidia, Microsoft Corp. (NASDAQ:MSFT), and Broadcom Inc. (NASDAQ:AVGO) which have witnessed stellar growth, thanks to AI buzz.
Fidelity MSCI Information Technology Index ETF (NYSE:FTEC): The ETF witnessed a 48.55% growth while exposing to stocks like Apple, Microsoft, Nvidia, Alphabet and Broadcom. It holds $12.05 billion in net assets.
Why It Matters: The surge in AI-themed ETFs is part of a broader trend driven by the increasing demand for artificial intelligence technologies. Recently, Nvidia briefly surpassed Apple to become the world's most valuable company, fueled by the demand for its AI supercomputing chips. This highlights the growing importance of AI in the tech sector.
Moreover, the International Monetary Fund (IMF) has noted AI's potential to enhance market efficiency but warns of increased volatility and cyber threats. The IMF's Global Financial Stability Report suggests that AI-driven trading could revolutionize markets, although its adoption remains limited. The report also cautions about the potential shift of investments to less regulated nonbank financial intermediaries, complicating market oversight.
