AI is a trending technology that intelligently renovates businesses' operational flows across various industries. Given the enormous potential of AI applications, companies and consumers are significantly boosting their AI adoption and investment.
Given the industry’s rosy growth prospects, it could be wise to buy AI ETFs Global X Robotics & Artificial Intelligence ETF (BOTZ), ROBO Global Robotics & Automation Index ETF (ROBO), and iShares Robotics and Artificial Intelligence Multisector ETF (IRBO) for potential returns. These AI ETFs provide exposure to a wide range of the top AI companies positioned for rapid growth.
Artificial Intelligence (AI) is a booming technology that optimizes business operations with automation, intelligent recognition and analysis, and other enterprise cognitive technologies. Viral AI tools like ChatGPT, launched by AI research and deployment startup OpenAI in November 2022, have caused a renewed interest in the industry.
ChatGPT reached approximately 100 million monthly active users, by January, just two months after launch, making it the fastest-growing consumer application in history, according to a UBS study.
In a recent poll of more than 2,500 executive leaders by Gartner, Inc., 45% of executives reported that the popularity of ChatGPT has prompted them to increase AI investments. 70% of executives said that their organization is currently in exploration mode with Generative AI.
Moreover, as per the Forbes Advisor survey, business owners are using or planning to incorporate AI across a wide range of areas to improve their operational efficiencies, reduce costs, and save time. The most popular application includes customer service, with 56% of businesses using AI for this purpose.
For cybersecurity and fraud management, AI is adopted by 51% of respondents. Other applications of AI include digital personal assistants (47%), customer relationship management (46%), and inventory management (40%). Also, businesses leverage AI for content production (35%), product recommendations, accounting (30%), and supply chain operations (30%).
According to a report by Grand View Research, the global artificial intelligence market is projected to reach $1.81 trillion by 2030, growing at a CAGR of 37.3%.
Therefore, investors could buy quality AI ETFs, BOTZ, ROBO, and IRBO, to ride the AI wave.
Let’s take a closer look at the fundamentals of these stocks:
Global X Robotics & Artificial Intelligence ETF (BOTZ)
BOTZ seeks to provide market-cap-selected and weighted exposure to companies that potentially stand to benefit from the growing adoption and utilization of robotics and artificial intelligence, including those involved with industrial robotics and automation, non-industrial robots, and autonomous vehicles.
BOTZ tracks the Indxx Global Robotics & Artificial Intelligence Thematic Index. BOTZ has assets under management (AUM) of $1.73 billion. The fund has a total of 45 holdings. Its top holdings include Intuitive Surgical, Inc. (ISRG) with a 10.06% weighting, NVIDIA Corporation (NVDA) at 9.50%, followed by ABB Ltd. and Keyence Corporation with 8.23% and 8.16% weightings, respectively.
The fund has an expense ratio of 0.69% compares to the category average of 0.65%. Over the past three months, BOTZs fund inflows came in at $101.86 million and $89.72 million over the past six months. Also, the ETF has a beta of 1.25.
BOTZ has gained 21.9% over the past six months and 17.9% over the past year to close the last trading session at $25.57. It has a NAV of $25.51 as of May 10, 2023.
BOTZ’s POWR Ratings reflect this promising outlook. The fund’s overall A rating equates 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.
BOTZ has an A grade for Trade, Peer, and Buy & Hold. Of the 118 ETFs in the B-rated Technology Equities ETFs group, it is ranked #10.
To access all BOTZ’s POWR Ratings, click here.
ROBO Global Robotics & Automation Index ETF (ROBO)
ROBO tracks a global index of companies that are driving transformative innovations in robotics, automation, and artificial intelligence (RAAI), such as companies that create technology to enable intelligent systems that can sense, process, and act and companies that apply those technologies to deliver RAAI-enabled products, including robots to consumers and businesses.
ROBO tracks the performance of the ROBO Global Robotics and Automation TR Index. With $1.35 billion in AUM, ROBO’s top holdings include Intuitive Surgical, Inc. (ISRG) with a 2.31% weighting, followed by Kardex Holding AG at 1.96%, and Azenta, Inc. and Keyence Corporation, at 1.77% and 1.76%, respectively. It currently has 80 holdings in total.
Over the past three months, ROBO’s fund inflows were $8.25 million, and $1.02 million over the past six months. In addition, its 0.95% expense ratio compares to the 0.65% category average. The ETF’s NAV was $53.20 as of May 9, 2023.
The fund has gained 12.5% over the past six months and 13.1% over the past year to close the last trading session at $53.25. It has a beta of 1.25.
ROBO’s fundamental strength is reflected in its POWR Ratings. The ETF has an overall rating of A, translating to a Strong Buy in our proprietary rating system.
ROBO has a grade A for Trade and Buy & Hold. It also has a B grade for Peer. The fund is ranked #12 out of 118 ETFs in the B-rated Technologies Equities ETFs group.
Click here to see all the ROBO ratings.
iShares Robotics and Artificial Intelligence Multisector ETF (IRBO)
IRBO seeks to provide exposure to an equal-weighted index composed of companies in developed or emerging market countries that stand to benefit from the long-term growth and innovation in robotics technologies and artificial intelligence.
The ETF tracks the performance of the NYSE FactSet Global Robotics and Artificial Intelligence Index. IRBO has an AUM of $304.10 million. The fund has a total of 118 holdings. Its top holdings include Meta Platforms Inc. (META) with a 1.56% weighting, Spotify Technology (SPOT) at 1.46%, and iQIYI, Inc. (IQ) and Meitu, Inc at 1.44%, respectively.
IRBO has an expense ratio of 0.47%, lower than the category average of 0.65%. Over the past month, its fund inflows were $12.08 million, and $44.02 million over the past six months. Also, it has a beta of 1.13.
IRBO has gained 15.6% over the past six months and 7.7% over the past year to close the last trading session at $29.31. The fund has a NAV of $29.23 as of May 10, 2023.
IRBO’s POWR Ratings reflect this strong outlook. The ETF’s overall B rating translates to a Buy in our proprietary rating system.
IRBO has a grade of B for Buy & Hold and Trade. Of the 118 ETFs in the same group, IRBO is ranked #46.
To access all the POWR Ratings for IRBO, click here.
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BOTZ shares were unchanged in premarket trading Thursday. Year-to-date, BOTZ has gained 24.43%, versus a 8.37% rise in the benchmark S&P 500 index during the same period.
About the Author: Mangeet Kaur Bouns
Mangeet’s keen interest in the stock market led her to become an investment researcher and financial journalist. Using her fundamental approach to analyzing stocks, Mangeet’s looks to help retail investors understand the underlying factors before making investment decisions.
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