Recently, as the fervor for artificial intelligence (AI) investment continues unabated, the number of ETFs focusing on this theme is surging, with asset management companies offering new ways for investors to capitalize on the market's enthusiasm for AI.
Data from Morningstar shows that out of more than twenty ETFs named after artificial intelligence, over one-third were launched this year. In the past week alone, three more have joined the ranks, including a cloud computing ETF that has been specifically renamed and revamped to focus on AI. These AI ETFs currently hold $4.5 billion in assets, bringing them closer to the $5.5 billion held by nuclear power-themed ETFs and far surpassing the marijuana industry, which holds $1.37 billion in assets.
Morningstar Senior Analyst Daniel Sotiroff said, "I'm not surprised they're multiplying. This is a rapidly growing, fast-moving industry."
Sotiroff indicated that the more than 200% stock price increase of AI industry leader and chipmaker Nvidia (NVDA.US) over the past 12 months may only reaffirm this confidence.
Tony Kim, head of BlackRock's foundational equity technology division, stated that in addition to Nvidia, AI may produce larger and more widespread beneficiaries in the future.
It is understood that Kim is the manager of two new AI-themed ETFs launched by BlackRock last Tuesday, namely the iShares A.I. Innovation and Tech Active ETF (BAI.US) and the iShares Technology Opportunities Active ETF (TEK.US).
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BlackRock's first AI product, the iShares Future AI & Tech ETF (ARTY.US), launched in 2018, has assets of $630 million and is currently trading slightly below its 52-week high set on October 14th.
Jay Jacobs, head of BlackRock's active and thematic ETFs, said that while the company's initial AI product was index-linked, these two new funds are actively managed, aiming to capture emerging opportunities in the AI field.
He stated, "The AI market is going to change dramatically. What you think of today will not be the same as tomorrow, next year, or a few years from now."Arms Race in Military Equipment
Bank of America Securities market analysts Ohsung Kwon and Savita Subramanian stated in a recent report that they believe there is an "artificial intelligence arms race" underway among large technology companies such as Microsoft (MSFT.US) and Amazon (AMZN.US). They calculated that this year, the four major giants' capital expenditures in artificial intelligence will reach $206 billion, a 40% increase from 2023. In contrast, they expect a slight decline in capital expenditures for the other 496 companies in the S&P 500 index.
According to estimates from the venture capital firm Accel, by the end of this year, venture capital firms will also provide up to $79.2 billion in funding to artificial intelligence startups, which is 27% higher than the level in 2023. This means that for every $1 invested by venture capital firms, 40 cents will flow to an artificial intelligence company.
Of course, investing in ETFs with an artificial intelligence theme does not guarantee outperforming the market. So far this year, the largest artificial intelligence fund, the Artificial Intelligence & Technology ETF-Global X (AIQ.US), has risen by about 20%, while the benchmark S&P 500 index has risen by 22%.
Earlier this month, Amplify ETFs renamed an existing cloud computing ETF to reflect a new focus on emerging technologies and named it the Amplify Bloomberg AI Value Chain ETF (AIVC.US).
Nathan Miller, Vice President of Product Development at Amplify, said, "Now, we are trying to lean towards the cloud field in a specific artificial intelligence way."
He added that the long-term goal is to be prepared to profit once all the capital expenditures in artificial intelligence begin to reflect in earnings and to be ahead in discovering new opportunities.
Miller stated, "Like all ETF companies, we are trying to provide investors with something different."