In today’s world, the adoption of Artificial Intelligence (AI) into business, society, and everyday life is recognized as transformative digitization. Hence, AI exchange-traded funds (ETFs) have become a major focus for investors seeking exposure to the rapidly advancing field of artificial intelligence.
Against this backdrop, let’s look at the fundamentally strong AI-driven ETFs ARK Innovation ETF (ARKK), Global X Robotics & Artificial Intelligence ETF (BOTZ), and Invesco NASDAQ Next Gen 100 ETF (QQQJ) for the next revolution.
The global adoption of AI is accelerating, driven by advancements in machine learning, natural language processing, and predictive analytics. Gen AI investments are directed toward core business functions. Moreover, AI ETFs are benefiting from increased corporate spending on AI solutions, which is projected to grow exponentially in the coming years.
AI is almost certainly considered revolutionary. As of 2024, 82% of businesses are using AI in some form, and 40% of companies around the globe are actively utilizing AI in their operations. The worldwide AI industry is anticipated to reach $1.81 trillion by 2030, growing at a CAGR of 37.3%. In global comparison, the United States is expected to be the largest market for AI, amounting to $50.16 billion in 2024.
Further, the emergence of AI is considered a pivotal technological breakthrough as it is transforming industries by improving efficiency, reducing costs, and creating new revenue streams. Also, thanks to machine learning and deep learning, AI applications learn from data and results in near real-time, analyzing new information from many sources and adapting accordingly, with a level of accuracy that’s invaluable to business.
With that in mind, let’s look at the fundamentals of the above-mentioned ETFs in detail:
ARK Innovation ETF (ARKK)
ARKK invests in stocks of companies operating in disruptive innovation sectors, including developing new products or services, technological improvements, and advancements in scientific research relating to genomics, artificial intelligence, transportation, energy, infrastructure and services, and fintech companies. ARK Investment Management LLC manages this fund and benchmarks its performance against the S&P 500 Index and the MSCI World Index.
As of December 11, 2024, the fund had $6.68 billion in assets under management (AUM) and an NAV of $60.60. ARKK has an expense ratio of 0.75%, compared to the category average of 0.49%.
The fund’s top holdings include Tesla, Inc. (TSLA) with a 15.92% weighting, Roku, Inc. (ROKU) at 9.35%, Coinbase Global, Inc. (COIN), and Roblox Corp. (RBLX) at 9.14% and 5.80%, respectively. It currently has a total of 33 holdings.
Over the past five days, the fund’s net outflow came in at $186.65 million. It has gained 42.8% over the past three months and 25.7% over the past year to close its last trading session at $61.81.
ARKK’s POWR Ratings reflect its robust prospects. The ETF has an overall rating of A, which translates to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
It also has an A grade for Buy & Hold, Trade, and Peer. Of the 119 ETFs in the A-rated Technology Equities ETFs group, ARKK is ranked #8. To access all of ARKK’s POWR Ratings, click here.
Global X Robotics & Artificial Intelligence ETF (BOTZ)
BOTZ seeks to track the performance of the Indxx Global Robotics & Artificial Intelligence Thematic Index. Managed by Global X Management Company LLC, the fund invests in companies operating across the development of robotics and/or artificial intelligence, including industrial robots and production systems and artificial intelligence software sectors. It includes a mix of value and growth stocks from companies of various market capitalizations.
With $2.71 billion in AUM, its top holdings are NVIDIA Corporation (NVDA) with a 12.98% weighting in the fund, Intuitive Surgical, Inc. (ISRG) at 10.39% weight, followed by ABB Ltd. (ABB), and Keyence Corporation with 9.36% and 6.73% weightings, respectively. The ETF has a total of 46 holdings.
The ETF's expense ratio is 0.68%, compared to the category average of 0.65%. BOTZ fund inflow was $33.71 million over the past five days and $29.43 million over the past month.
BOTZ pays an annual dividend of $0.05, which translates to a 0.14% yield at the current price level. Its four-year average yield is 0.19%.
Over the past year, BOTZ has gained 26.2% and 14.7% over the past three months to close the last trading session at $33.73. The fund’s NAV was $33.56 as of December 11, 2024.
BOTZ’s solid fundamentals are reflected in its POWR Ratings. The fund has an overall rating of A, which translates to a Strong Buy in our proprietary rating system.
The fund has an A grade for Buy & Hold and Trade. Among the 119 ETFS, BOTZ is ranked #16 in the Technology Equities ETFs group. Click here to access all the BOTZ ratings.
Invesco NASDAQ Next Gen 100 ETF (QQQJ)
Invesco Capital Management LLC manages QQQJ. The fund invests in growth and value stocks of companies operating across communication services, consumer discretionary, consumer staples, energy, health care, industrials, information technology, materials, real estate, and utility sectors. It seeks to track the performance of the Nasdaq Next Gen 100 Index.
As of December 11, QQQJ had $694.30 million in AUM. It had an NAV of $32.48 as of December 11. Its expense ratio of 0.15% is lower than the category average of 0.56%.
The fund’s top holdings include Axon Enterprise Inc. (AXON) with a 3.09% weight, Alnylam Pharmaceuticals, Inc. (ALNY) with a 2.09% weight, United Airlines Holdings, Inc. (UAL) with a 2.04% weight, and eBay Inc. (EBAY) with a 1.98% weight. It has a total of 103 holdings.
QQQJ’s trailing-12-month dividend of $0.24 yields 0.76% on the current price level, while its four-year average dividend yield is 0.75%. Its dividend payouts have grown at a 31.7% CAGR over the past three years.
QQQJ has gained 27.4% over the past year and 16.9% over the past six months to close the last trading session at $32.47. Its fund inflow came in at $1.94 million over the past five days.
QQQJ’s promising outlook is reflected in its POWR Ratings. The ETF has an overall A rating, equating to a Strong Buy in our proprietary rating system.
It has an A grade for Buy & Hold, Peer, and Trade. It is ranked #76 out of 280 ETFs in the Large Cap Blend ETFs group. To see the POWR Ratings of QQQJ, click here.
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ARKK shares were trading at $61.10 per share on Thursday afternoon, down $0.71 (-1.15%). Year-to-date, ARKK has gained 16.67%, versus a 28.55% rise in the benchmark S&P 500 index during the same period.
About the Author: ShreyaRathi
