Just because Microsoft, Nvidia, and C3.ai have been big winners this year, doesn't mean they're necessarily the best stock investments right now.
First, the price of AI stocks has soared, making their valuations less attractive. As of July 10, the basket of AI stocks created by JPMorgan Securities had gained 42% annually compared to the S&P 500, which represents the entire U.S. stock market. The broader technology sector rose 25% compared to the benchmark index.
Another reason to be cautious is that AI stocks may take a pause to digest their gains. “In the short term, AI companies could do worse than the broader market,” Robbins said.
Finally, successful AI stocks are not necessarily future winners. Two of his three AI stocks above are mega-cap companies. But history shows that small, nimble growth stocks are more likely to introduce and profit from innovative new products and services.
Buy AI Exchange Traded Funds
Investing your money in an AI-themed ETF is a lower-risk alternative than owning AI stocks.
Major ETF fund families are adding to existing products or launching new funds to take advantage of the surging demand for AI investing. So far in 2023, inflows into AI ETFs have increased by more than 70% in the US, compared to 2% for US-listed equity ETFs overall.
According to ETF.com, there are 17 ETFs in the U.S. that are at least primarily focused on AI or its analogs, machine learning. They own stocks in companies that make products such as computer chips for the AI industry or use AI in their businesses.
ETFs are becoming increasingly popular in Australia. In fact, ASX research shows that the number of people investing in ETFs has increased by more than 30% in the past three years, with one in five investors now investing in at least one I own shares in the ETF. Australia does not have an ETF of his that invests directly in AI, but there is an ETF of his that focuses on exposure to the technologies that underpin artificial intelligence. Here are some of his ASX AI-themed ETFs that investors may want to explore.
- BetaShares Global Robotics and Artificial Intelligence ETF (ASX: RBTZ). RBTZ targets top companies expected to benefit from increased adoption of robotics and AI, particularly those investing in self-driving cars and drones, industrial robots and automation, non-industrial robots, and of course AI itself. Provides exposure.
- Global X ROBO Global Robotics & Automation ETF (ROBO). Issued by Global X Management, ROBO features broad exposure to various markets including Asia and Europe. Similar to RBTZ, this fund invests in companies that have the potential to benefit from the growing adoption of robotics and AI, including both industrial robots and automation and non-industrial robots.
- BetaShares S&P/ASX Australian Technology ETF (ATEC). This ETF tracks the performance of the S&P/ASX All Technology Index and aims to provide exposure to leading ASX-listed technology companies covering sectors such as consumer electronics, online retail and medical technology. .
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