Is This the Best Artificial Intelligence ETF On the Market You Should Be Buying?

Since ChatGPT debuted in late 2022, artificial intelligence has exploded into investor consciousness. While AI has been around for years, the practicality of the technology was on display for all to see.

You probably use AI way more than you think. Sure, tapping into ChatGPT or Grok to ask a question is obvious, but it is also powering your movie selections on Netflix (NASDAQ:NFLX), your music selection on Spotify (NYSE:SPOT), the NPCs you interact with in the video games you play, and even flagging potential fraudulent transactions in your bank account.

Nvidia (NASDAQ:NVDA) might have become the face of artificial intelligence because of its powerful and advanced AI chips working behind the scenes everywhere, but AI is more prevalent than you think, which opens worlds of opportunity to invest in it.

For investors wanting to capitalize on the technology’s potential, but looking to go beyond the headline names everyone else has already bought into, like Nvidia, the best way to do so is through buying an exchange-traded fund (ETF) that targets the sector.

While a number of funds have sprouted up since ChatGPT, one of the best AI ETFs to buy is the Global X Artificial Intelligence & Technology ETF (NYEARCA:AIQ).

Riding the AI megatrend

The AI megatrend is reshaping industries, from healthcare to agriculture, with a projected global market size of $826.7 billion by 2030. For investors aiming to capitalize on this seismic shift, the Global X Artificial Intelligence & Technology ETF offers a compelling avenue. 

With $3 billion in assets, AIQ tracks the Indxx Artificial Intelligence & Big Data Index, delivering diversified exposure to 85 companies driving AI innovation. Its blend of growth potential, reasonable costs, and a portfolio that stretches beyond the usual suspects makes it an excellent buy-and-hold choice to harness AI’s long-term ascent.

AIQ’s strength lies in its broad reach. Unlike funds laser-focused on hardware giants, it spans the AI ecosystem, including software, services, and infrastructure, across global markets. At a 0.68% expense ratio is pricier than broad-market ETFs, but remains competitive for thematic plays, balancing cost with targeted exposure. 

Since its 2018 launch, AIQ has posted a 15.8% annualized return, outpacing the S&P 500’s 14.2% over the same stretch. That’s a testament to its ability to tap AI’s growth, even amid 2022’s tech wobble, where it fell 26% versus the benchmark index’s 18% drop. 

With forecasts of 729 million AI tool users by 2030, up nearly three-fold from 254 million in 2023, AIQ is positioned to ride this wave.

More opportunities, less risk

Beyond headline names like Nvidia, AIQ holds notable stocks in the space. For example, cloud-computing firm ServiceNow (NYSE:NOW), which represents 2.4% of the portfolio, powers enterprise workflows with AI-driven automation and serves 85% of the Fortune 500. Its stock had been up 45% over the past year before its earnings report caused it to tumble, but itss operations are fueled by AI integrations that boost productivity, such as its chatbots slashing IT ticket times. 

Then there’s data cloud platform Snowflake (NASDAQ:SNOW), a smaller holding at 0.7%, that has become a backbone for AI analytics. Its partnerships with Microsoft (NASDAQ:MSFT) and Amazon (NASDAQ:AMZN) amplify its role in big data, a critical AI fuel. These aren’t chip makers, but rather the picks and shovels of AI’s software gold rush.

Risks exist, of course. Tech volatility, regulatory hurdles, or and even tariffs or export bans on technology to China could disrupt the market and upset supply chains. A market correction like the one in 2022 could hit AIQ harder than broader funds. Yet, its 83% U.S. weighting and diversified stock roster temper those blows. 

Key takeaways

The Global X Artificial Intelligence & Technology ETF is not a gamble. Look at it as a calculated play on AI’s unstoppable rise. Stocks like ServiceNow and Snowflake highlight its depth beyond Nvidia (though it holds the major players too, including Meta Platforms (NASDAQ:META) and Palantir Technologies (NASDAQ:PLTR)), capturing the software and data layers powering tomorrow. 

With a solid track record and a megatrend in its sails, AIQ stock is a keeper for anyone betting on AI’s future.

The post Is This the Best Artificial Intelligence ETF On the Market You Should Be Buying? appeared first on 24/7 Wall St..