Meta Platforms Inc. (ticker: META), once known as Facebook, has emerged as one of Wall Street’s most remarkable comeback stories in recent years. Following a challenging pivot to the metaverse and a bearish market throughout 2022, Meta experienced a dramatic revival.
On Feb. 1, the company unveiled earnings for the fourth quarter and full-year 2023, leading to a $204.5 billion surge in market cap the following day, accompanied by a 20% spike in its share price.
This resurgence was driven by robust revenue growth, the announcement of a $50 billion increase in share buybacks and, notably, the initiation of a quarterly dividend of $0.50 per share for the first time.
[Sign up for stock news with our Invested newsletter.]
While Meta’s financial performance has undoubtedly excited investors, those with a long-term perspective may find greater interest in the tailwinds provided by an earlier strategic move: the company’s significant investment in Nvidia Corp. (NVDA) graphics processing units.
This investment was aimed at bolstering Meta’s artificial intelligence, or AI, infrastructure, marking a critical step in the intensifying race within the AI landscape.
Other major players in the technology sector, such as Microsoft Corp. (MSFT) and Alphabet Inc. (GOOG, GOOGL), are also reallocating substantial resources toward AI projects, gearing up for a future where these technologies play a central role in their operations and research endeavors.
“We expect the AI market to reach over half a trillion dollars in value by 2024 even amid a slowdown in venture capital funding, as organizations across various sectors adopt AI to enhance efficiency, cut costs and enhance customer experiences,” says Tejas Dessai, assistant vice president and research analyst at Global X ETFs.
For investors looking to capitalize on this growth, thematic exchange-traded funds, or ETFs, focused on AI, offer accessible options. These ETFs provide exposure to leading companies at the forefront of the global AI industry, allowing investors to partake in the sector’s returns without needing to pick individual stocks.
“We’re in the early stages of the AI cycle, and proper diversification is extremely important — be it across company stages or geographies — because it’s difficult to pick a winner or two this early,” Dessai says. “With a thematic ETF, you’re following an idea as opposed to a complex strategy.”
Here are six of the best AI ETFs to buy today:
| ETF | Expense ratio |
| Invesco AI and Next Gen Software ETF (IGPT) | 0.60% |
| Roundhill Generative AI & Technology ETF (CHAT) | 0.75% |
| Global X Artificial Intelligence & Technology ETF (AIQ) | 0.68% |
| Global X Robotics & Artificial Intelligence ETF (BOTZ) | 0.69% |
| iShares Robotics and Artificial Intelligence Multisector ETF (IRBO) | 0.47% |
| Amplify AI Powered Equity ETF (AIEQ) | 0.75% |
Invesco AI and Next Gen Software ETF (IGPT)
“Looking ahead to 2024, we believe the AI trend will broaden in scope to encompass additional segments of the market, with new technological advancements, a more stable interest rate environment and the ongoing impact of fiscal stimulus broadening innovation across multiple industries,” says Rene Reyna, head of thematic and specialty product strategy at Invesco.
Invesco’s AI offering is IGPT, which tracks the STOXX World AC NexGen Software Development Index. “The index targets 100 companies from across the globe that generate revenue from various forms of software and artificial intelligence such as data storage, robotics, autonomous vehicles, semiconductors and web platforms,” Reyna says. It carries a 0.6% expense ratio.
Roundhill Generative AI & Technology ETF (CHAT)
AI first began capturing investor attention on Nov. 30, 2022, when OpenAI launched ChatGPT, a chatbot that employs generative AI to produce human-like text in response to queries. Quickly recognizing generative AI’s potential, Microsoft expanded its partnership with OpenAI in January 2023, increasing investment and deploying OpenAI’s capabilities across its product suite.
For targeted exposure to generative AI in particular, investors can buy CHAT. This ETF is actively managed, which means Roundhill’s team uses their discretion and expertise to select the stocks they believe will provide the best exposure to generative AI. CHAT has a fairly concentrated portfolio of 40 holdings and currently charges a 0.75% expense ratio.
Global X Artificial Intelligence & Technology ETF (AIQ)
Global X’s flagship AI-themed ETF, AIQ recently crossed $1 billion in assets under management, or AUM, on strong investor interest and performance. In 2023, the ETF returned 55.4%, beating out the powerhouse Invesco QQQ Trust (QQQ), which returned 54.9%. AIQ achieved this despite a high 0.68% expense ratio, more than three times that of QQQ at 0.2%.
“AIQ offers a broad and comprehensive exposure to the entire AI value chain, with exposure that ends up looking quite like the Nasdaq-100 index but is more tilted toward technology and mid-cap growth,” Dessai says. Notable top holdings in AIQ currently include Meta Platforms, Netflix Inc. (NFLX), Nvidia, Amazon.com Inc. (AMZN), Adobe Inc. (ADBE) and Microsoft.
[READ: Magnificent 7 Stocks: What They Are and How They Dominate the Market]
Global X Robotics & Artificial Intelligence ETF (BOTZ)
AIQ isn’t Global X’s sole offering for AI exposure. The firm also offers BOTZ, which tracks the Indxx Global Robotics & Artificial Intelligence Thematic Index. “We see BOTZ as a more niche play on applied automation,” Dessai says. “In addition to the momentum of AI, the theme also benefits from industrial investments supporting broad re-shoring of manufacturing across the United States.”
Whereas AIQ has a strong tilt toward large-cap U.S. technology stocks, BOTZ takes a different approach. A significant portion of its portfolio is classified as industrial and health care, and a decent chunk hails from developed international countries like Japan, Switzerland and Norway. The ETF charges a 0.69% expense ratio and is very tax-efficient, with an extremely low 0.01% 30-day SEC yield.
iShares Robotics and Artificial Intelligence Multisector ETF (IRBO)
A common criticism of thematic ETFs is their higher expense ratios. For example, both the previous Global X ETFs charge many multiples of what a broad market index ETF like the Vanguard Total Stock Market ETF (VTI) does, at 0.03%. For cost-conscious investors looking for AI exposure, IRBO could be a viable alternative, given its lower expense ratio of 0.47%.
This ETF tracks the NYSE FactSet Global Robotics and Artificial Intelligence Index. Unlike AIQ and BOTZ, IRBO’s benchmark is much less top-heavy and less concentrated in large-cap stocks. Instead, IRBO equally weights a portfolio of 111 global companies that benefit from developments and advancements in AI and robotics, most of which hail from the technology and communications sectors.
Amplify AI Powered Equity ETF (AIEQ)
The last ETF on this list doesn’t explicitly invest in AI industry companies. Rather, the ETF takes a “meta” approach by using AI to power its investment selection and management process. This ETF is powered by IBM Watson, which uses machine learning, sentiment analysis and natural language processing to select the holdings of its benchmark, the EquBot index, for a 0.75% expense ratio.
On a daily basis, the AI behind AIEQ analyzes news, social media, analyst reports and financial statements to select the stocks best poised to outperform. In 2023, the fund managed to narrowly beat the SPDR S&P 500 ETF (SPY), returning 26.5% versus 26.2%, despite facing headwinds from a much higher expense ratio. So far, AIEQ has attracted just over $111 million in AUM.
More from U.S. News
Artificial Intelligence Stocks: The 10 Best AI Companies
AI in Health Care: 8 Best Stocks to Buy
AI in Education: 5 Stocks With Growth Potential
6 of the Best AI ETFs to Buy Now originally appeared on usnews.com
Update 02/09/24: This story was previously published at an earlier date and has been updated with new information.
