Artificial Intelligence (AI)

‘Video Killed the Radio Star’, So Let’s Turn to Artificial Intelligence with This ETF

As any avid reader, music lover or history buff knows, the past can often forewarn of the future, and in The Buggles 1979 hit, “Video Killed the Radio Star,” the band did just that with its iconic lyric: “We can’t rewind, we’ve gone too far.”

Heading into 2024, we are no longer interested in video-cassette recorders, or VCRs, as the younger audience may know them. But we are intrigued by artificial intelligence (AI).

While the market had its ups and downs throughout the past year, AI pushed onward and led the charge into the future with continued success in AI software such as OpenAI’s ChatGPT.

So, as the holidays have tapped into our wallets, let’s harness the power of AI technology and its beneficiaries through the Global X Artificial Intelligence & Technology Exchange-Traded Fund (NASDAQ: AIQ).

AIQ is a passively managed, exchange-traded fund (ETF) that seeks to invest in developed market companies that are involved in the use of AI to analyze large quantities of data, whether for their own operations, as a service to other companies or through the production of related hardware.

The fund is able to determine the above classifications based on analysis of public filings, products and services, official company statements and further information regarding a company’s direct involvement in the AI or big-data categories.

Simply put, AIQ offers investors exposure to companies that operate in the AI space or stand to potentially benefit from further AI developments.

Pursuant to the ETF’s underlying index, the Artificial Intelligence & Big Data Index, it has a global reach, but it only selects stocks with a market cap of $2 billion for AI developers/AI-as-a-service providers or $500 million for AI hardware and quantum-computing companies.

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AIQ has seen great success in 2023, and has garnered roughly $570 million in new money and risen roughly 47% in overall growth to round out the year.

The fund has net assets of $861 million and roughly $815 million in assets under management (AUM).

As you can see from the chart below, AIQ is soaring into the new year and is nearly at its 52-week high of $31.04, as it’s currently trading around $31.01. Moreover, looking at the fund’s 50- and 200-week moving averages, the steady incline is evident.

Courtesy of Stockcharts.com

AIQ’s geographical exposure is concentrated in three main countries: the United States, 66.8%; China, 7.8% and Germany, 4.2%.

The fund’s top 10 holdings include Intel Corp. (INTC), 3.80%; Adobe Inc. (ADBE), 3.42%; ServiceNow Inc. (NOW), 3.42%; IBM Corp. (IBM), 3.30%; Amazon Inc. (AMZN), 3.25%; Meta Platforms Inc. Class A (META), 3.21%; Netflix Inc. (NFLX), 3.20%; Salesforce Inc. (CRM), 3.20%; Alphabet Inc. Class A (GOOGL), 3.19% and Microsoft Corp. (MSFT), 3.19%.

With strong liquidity and robust net and AUM assets, AIQ is set up to continue its forward momentum and provide interested investors with a broad exposure to AI-centric companies.

In a nutshell, this is the season of giving, and for my thrill-seeking, long-term investors out there, AIQ may be a potential Christmas gift to yourselves.

So, with a new year upon us, and an ever-growing hunger for technological advancement, I find it fitting to depart with a quote from legendary futurist, American writer and businessman, Alvin Toffler: “The great growling engine of change — technology.”

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As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an email. You may just see your question answered in a future ETF Talk.

Jim Woods

Jim Woods is a 20-plus-year veteran of the markets with varied experience as a broker, hedge fund trader, financial writer, author and newsletter editor. Jim is the editor of Successful Investing, the Bullseye Stock Trader, and The Deep Woods (formerly the Weekly ETF Report). His books include co-authoring, “Billion Dollar Green: Profit from the Eco Revolution,” and “The Wealth Shield: How to Invest and Protect Your Money from Another Stock Market Crash, Financial Crisis or Global Economic Collapse.” He’s also ghostwritten many books and articles, as well as edited content for some of the investment industry’s biggest luminaries. His articles have appeared on many leading financial websites, including StockInvestor.com, InvestorPlace.com, Main Street Investor, MarketWatch, Street Authority, Human Events and many others. Jim formerly worked with Investor’s Business Daily founder William J. O’Neil, helping to author training courses in the CANSLIM stock-picking methodology. The independent firm TipRanks rates Jim the No. 3 financial blogger in the world (out of more than 6,000). TipRanks calculates that, since 2012, he's made 361 successful recommendations out of 499 total, earning a success rate of 72% and a +15.3% average return per recommendation. He is known in professional and personal circles as “The Renaissance Man,” because his expertise includes such varied fields as composing and performing music; Western horsemanship, combat marksmanship, martial arts, auto racing and bodybuilding. Jim holds a BA in philosophy from the University of California, Los Angeles, and is a former U.S. Army paratrooper. A self-described “radical for capitalism,” he celebrates the virtue of making money from his Southern California horse ranch.