AI Remains in Early Investment Stage

A year ago, I’m pretty sure I had little idea what artificial intelligence (AI) was and what it could become. While there were a few related ETFs, AI was just another one of the long-term investment themes. Of course, then the public release of ChatGPT occurred, and many companies saw the top- and bottom-line growth from AI begin to emerge. Many growth and information technology-laden ETFs climbed sharply this year.

As we head toward 2024, AI is the theme to watch. During a Harbor Capital Advisors webcast at the end of November, VettaFi asked a key question. “What do you believe will be the largest structural growth opportunity as we head into 2024?” Most advisors (55%) chose artificial intelligence, while another 18% included it along with semiconductors and electric vehicles. As a standalone, semiconductor (18%) was a distant second.

VettaFi believes we are in the early stages of AI. The potential for investors is one of the reasons VettaFi acquired the ROBO Global Index suite in 2023. AI is a paradigm shift that will reverse engineer the digital and physical world and provide solutions for our most important problems of our time. As we approach the next stage of deployment we will see increased demand s enhance grow across networking, security, and multi-modal AI capabilities and enablers.

Broad Growth and Tech ETFs Benefitting from AI

The Invesco QQQ Trust (QQQ) and its lower-cost sibling the Invesco NASDAQ 100 ETF (QQQM) were up 46% year-to-date as of early December, easily outperforming the 21% gain for the S&P 500 Index. The Technology Select Sector SPDR ETF (XLK) rose 48%. Mega-cap growth stocks like Alphabet,, Meta Platforms, Microsoft and NVIDIA were among the strongest performers in the broader market indexes due in part to AI. However, these ETFs also are impacted by industry trends. Some investors have sought out more targeted, and strong performing, thematic ETFs.