AI Stocks Can Reward Again, But Investors Need to Look Long Term

Shares of Nvidia (NVDA) are down a staggering 17.22% for the week ending Sept. 4. That decline is made all the worse when considering U.S. markets were closed on Monday in observance of the Labor Day holiday. Sure, Nvidia is just one example, but it's widely viewed as one the equity proxies on the AI investment theme.

Recent weakness in shares of the semiconductor giant underscore a few points. First, stock-picking in the artificial intelligence arena is tricky. That underscores the benefits of ETFs such as the WisdomTree Artificial Intelligence and innovation Fund (WTAI).

Second, it’s becoming increasingly apparent that investors will need to exercise some patience if they hope to reap large rewards from AI stocks. WTAI's broad-based approach mitigates single-stock risk (unlike some rivals). The fund can be useful for market participants looking to employ some AI-related restraint. It’s a good thing, too, because some experts believe patience will carry the day when it comes to AI investing.

AI ETF WTAI Has Merit

One reason some AI stocks have recently pulled back is because there are signs the U.S. economy is cooling. While a recession could well be averted, economic lethargy could compel some management teams to dial back AI spending. In other words, investors considering assets such as WTAI need to examine differences between the long-term AI outlook and the current macroeconomic situation.

Investors are debating whether future revenues for top tech and cloud computing firms could justify billions of dollars of capital spending being poured into artificial intelligence (AI). We think it’s key to distinguish between the individual companies and broader economy when gauging the impact,” according to BlackRock.