February 29, 2024

The dominant stock market theme in 2023 was artificial intelligence (AI). Companies like Nvidia, Microsoft, Amazon, and Alphabet saw tremendous returns as AI technology became more widely adopted. However, not every company will succeed in the AI space, leading to volatility in the industry. Investors can limit their exposure to potential failures by investing in exchange-traded funds (ETFs) focused on AI.

The Global X Artificial Intelligence and Technology ETF (AIQ) is a diversified fund with a heavy focus on top AI companies like Intel, Nvidia, Meta Platforms, and Amazon. The ETF delivered a 55% return in 2023, outperforming the S&P 500 and showing potential for continued outperformance.

The Global X Autonomous and Electric Vehicles ETF (DRIV) is another option for investors interested in the AI opportunity around electric vehicles and self-driving technology. It holds investments in companies like Tesla, Nvidia, Alphabet, and Apple. Despite a high concentration in a specific industry, the ETF delivered a solid return of 24% in 2023, matching the S&P 500.

Both ETFs provide exposure to some of the world’s fastest-growing AI companies and have the potential for continued outperformance in the future. Investing in AI through diversified ETFs might provide a more stable way to capitalize on the growth of the AI industry while limiting exposure to potential failures.

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