Artificial intelligence (AI) and robotics are anything but new, and investors have had access to related stocks and funds for years. But rapid developments in both technologies have seemingly turned the present into a pivotal point for their respective industries – and for the future prospects of robotics and AI ETFs.
Something changed irrevocably when generative artificial intelligence exploded on the scene with Open AI's ChatGPT.
The chatbot crossed 1 million users just five days after its launch in late November 2022. It reached 100 million monthly active users by January 2023, a feat UBS said made ChatGPT the fastest-growing consumer application ever.
And OpenAI CEO Sam Altman said at The New York Times DealBook Conference on December 4, 2024, that ChatGPT exceeded 300 million weekly active users.
It's not just ChatGPT, however – the entire AI industry is poised for breakneck growth. According to Grand View Research estimates, the AI industry is expected to surge from about $197 billion in 2023 to $1.8 trillion by 2030, representing a wild compound annual growth rate (CAGR) of 37%.
"The continuous research and innovation directed by tech giants are driving the adoption of advanced technologies in industry verticals, such as automotive, healthcare, retail, finance and manufacturing," Grand View says.
Industrial robotics, while tamer by comparison, is still estimated to swell from $30 billion to more than $60 billion in the same time frame, Grand View Research adds, a CAGR of approximately 11%.
No doubt, many investors are increasingly considering chasing that growth – but how you do it matters. You could consider individual AI stocks, though if you make the wrong concentrated bets, you could lose big even if artificial intelligence continues to take off.
And you could consider seeking out the best ETFs to buy in the broader tech sector that have some AI exposure, though you risk watering down your exposure to the artificial intelligence and robotics industries.
Perhaps your best bet, then, is to invest in robotics and AI ETFs – and we're going to introduce you to seven such funds today.
There is a lot of overlap between the artificial intelligence and robotics worlds. But the best robotics and AI ETFs differ in how much they focus on one, the other or both.
Each ETF offers its own take on these explosive industries – so take note of their differences when determining which fund is your ideal way to invest in the sector.
We'll begin with AI-focused funds, transition to mixed robotics and AI ETFs and finish with robotics-specific ETFs.
Data is as of December 3.
- Assets under management: $2.5 billion
- Expenses: 0.68%, or $68 annually for every $10,000 invested
Our first AI-specific ETF is the Global X Artificial Intelligence & Technology ETF (AIQ).
Launched in May 2018, AIQ invests in companies that are developing AI products and services as well as companies responsible for hardware that helps facilitate artificial intelligence for big data uses.
The result is a roughly 80-stock portfolio made up of three types of companies:
- Consumer-focused AI, such as Magnificent 7 stocks Meta Platforms (META) and Netflix (NFLX);
- Backend services AI, such as Dow stock Salesforce (CRM) and Oracle (ORCL); and
- Hardware manufacturers, such as semiconductor stocks Nvidia and Broadcom (AVGO).
As you can see, there's a heavy tilt toward mega-cap, beginner-friendly stocks, which will certainly soothe investors worried about investing in less stable niche plays.
But AIQ's makeup also provides us with another reason why plain-vanilla tech ETFs aren't the right way to capture AI and robotics themes.
In addition to the fact that even a tech-sector fund will contain many companies that don't deal in artificial intelligence, that kind of fund also won't capture the other sectors involved in AI.
To wit, while AIQ has 67% of its assets in tech stocks, it also has another 13% in consumer discretionary, 10% in communication services stocks and 9% in industrials as well as light exposure to healthcare and financials.
One more thing worth noting is that AIQ offers some geographical diversification. More than 70% of the fund is U.S.-based, but it also holds stocks from 10 other countries, including China (8%), Ireland (4%), Canada (4%) and South Korea (3%).
Learn more about AIQ at the Global X provider site.
- Assets under management: $153.8 million
- Expenses: 0.68%
Another pure play worth noting is the relatively young ROBO Global Artificial Intelligence ETF (THNQ), which launched in May 2020.
Like AIQ, THNQ focuses on companies that bring artificial intelligence to the masses as well as companies whose products make AI possible. Indeed, THNQ sorts its portfolio of artificial intelligence stocks into two main buckets:
- Infrastructure (64%), which includes businesses ranging from big data and cloud providers to semiconductor manufacturers; and
- Applications & Services (36%), which includes e-commerce, consulting services, factory automation and more.
Each of these companies must meet several criteria to be considered genuinely tethered to AI, including high levels of AI investment and high AI-revenue purity.
Microsoft (MSFT), one of 55 THNQ holdings, raised its AI leadership profile with the launch of its ChatGPT-powered Bing AI search engine in February 2023.
Shopify (SHOP) uses artificial intelligence to generate personalized content such as product descriptions for the online stores it supports, while Cloudflare (NET) deploys the technology to analyze network traffic and detect and block bot attacks, phishing attempts and other malicious activity in real time.
THNQ's portfolio is concentrated in the U.S. (78% of assets), but it includes exposure to Taiwan (8%) as well as China (4%) and Canada (3%).
Learn more about THNQ at the ROBO Global provider site.
- Assets under management: $1.1 billion
- Expenses: 0.95%
We'll start our look at "mixed" robotics and AI ETFs with the granddaddy of them all, the ROBO Global Robotics & Automation Index ETF (ROBO), which launched in October 2013.
As the name suggests, ROBO is not a pure-play artificial intelligence fund (nor are most AI ETFs). Instead, the fund targets "global companies that are driving transformative innovations in robotics, automation, and artificial intelligence (RAAI)."
So, while AI is part of ROBO's game, it's just that: part. It's not a large part, either. Like THNQ, ROBO divides its portfolio into two main buckets – Applications (61%) and Technologies (39%), each of which comprises several subgroups.
The Computing & AI subgroup makes up just 11% of the portfolio. That's behind Manufacturing & Industrial Automation at 21% as well as Logistics Automation at 15%, Actuation at 13% and Healthcare at 12%.
You can see how industrial in nature ROBO is through the above and other groupings, such as Business Process Automation, Sensing, Integration and even 3D Printing.
ROBO holds 78 stocks, including robotic surgery firm Intuitive Surgical (ISRG), Swiss automated storage and retrieval specialist Kardex Holding and Japanese robotics leader Fanuc (FANUY).
In fact, you see plenty of international stocks in ROBO – a truly "global" fund with just 46% of assets dedicated to U.S. firms. Japan (18%) looms largest after that, followed by Taiwan (8%) and Germany (7%), among roughly 50 total countries.
Just note that this heavier international exposure comes at a cost – ROBO is the most expensive AI ETF on this list, at 0.95% in annual fees.
Learn more about ROBO at the ROBO Global provider site.
- Assets under management: $465.4 million
- Expenses: 0.65%
The First Trust Nasdaq Artificial Intelligence and Robotics ETF (ROBT) gives it away in the name: This isn't a pure-play AI ETF, either. But the pendulum definitely swings more toward artificial intelligence in this ETF.
Specifically, 56% of assets are invested in the technology sector, alongside another 10% in consumer discretionary stocks and 5% in communication services. Still, a good chunk of assets are dedicated toward industrials (18%), with exposure to healthcare (6%), financials (3%), energy (2%) and consumer staples stocks (1%).
ROBT seeks to invest in three types of companies involved in AI, robotics or automation:
- Enablers (develop the building blocks);
- Engagers (design, create, integrate or deliver via products, software or systems); and
- Enhancers (provide services within the ecosystem, but not core to their offerings).
The fund scores companies based on its involvement within one of those categories. It then builds the portfolio with 60% of assets in Engagers, 25% for Enablers and 15% for Enhancers. Stocks are equally weighted within each category, so single-stock risk is minimized.
The greatest weighting right now, for instance, is data analytics firm Palantir (PLTR) at 3.6%. Other holdings include AI lending platform Upstart Holdings (UPST) and enterprise AI platform C3.ai (AI).
This is a larger portfolio than most AI ETFs, with more than 100 holdings. And it too is global in nature, with 34% of assets invested in foreign stocks from Japan (9%), Israel (4%), France (3%), South Korea (3%) and a few other countries.
Learn more about ROBT at the First Trust provider site.
- Assets under management: $678.8 million
- Expenses: 0.47%
As of August 12, 2024, the iShares Robotics and Artificial Intelligence Multisector ETF (IRBO) became the iShares Future AI & Tech ETF (ARTY). The ETF's basic structure and purpose remain intact. ARTY is not a pure-play AI ETF, but it does provide more exposure to the theme than the first two products we highlighted.
ARTY is an index fund that "combines a rules-based methodology with fundamental research to adapt to the evolving AI landscape." The ETF invests in four key areas of the AI value chain:
- Generative AI;
- AI Data & Infrastructure;
- AI Software; and
- AI Services.
Microsoft, the fund literature notes, has developed the GPT-4-powered Copilot generative AI feature for its Office 365 suite as well as scalable custom AI solutions through its Azure OpenAI platform. Nvidia is synonymous with AI data and infrastructure and has become the biggest company in the world supplying AI chips for training large language models like ChatGPT.
Meanwhile, SentinelOne (S) is writing AI software for real-time threat detection, mitigation and response for devices, data and cloud systems. And Capgemini (CGEMY) is offering AI-powered data analytics, machine learning and automation to help businesses of all types improve productivity.
The technology sector shines in ARTY at 91% of the portfolio. Communications commands another 6% of assets, consumer discretionary 3%. This AI ETF is geographically concentrated too, with the U.S. at 90% of holdings. Taiwan and France each account for approximately 4%, with Canada at 2%.
Perhaps most notable about ARTY is its 0.47% expense ratio – tied with our final fund for lowest fees among these robotics and AI funds.
Learn more about ARTY at the iShares provider site.
- Assets under management: $2.7 billion
- Expenses: 0.68%
The Global X Robotics & Artificial Intelligence Thematic ETF (BOTZ) launched a few years after ROBO, in 2016, and is very much a veteran name in the space. Despite what that name might imply, BOTZ leans more heavily on robotics and industrial automation.
Global X doesn't explicitly break out AI as an industry, though there are clear artificial intelligence connections, including Nvidia and robot-vacuum maker iRobot (IRBT).
However, this tight portfolio of less than 50 holdings is much thicker in robotics names, including the likes of Swiss industrial technology firm ABB (ABB), Japanese sensor maker Keyence (KYCCF) and American machine vision company Cognex (CGNX).
Again, there's overlap – all three of those industrial-facing firms involve elements of artificial intelligence, but they're less "true" AI plays and more in the robotics camp.
BOTZ is a geographically diversified AI ETF, with 54% of its holdings in the U.S., 26% in Japan and another 11% in Switzerland. The rest of the portfolio is scattered across seven other countries.
Also worth noting is BOTZ's high single-stock concentrations at the top of the portfolio. Nvidia makes up 13% of assets by itself, while Intuitive Surgical (10%), ABB (9%) and Keyence (7%) account significant allocations too.
Still, Global X's Robotics & Artificial Intelligence is a strong offering from a leader in thematic ETFs.
Learn more about BOTZ at the Global X provider site.
- Assets under management: $12.1 million
- Expenses: 0.47%
Our final ETF is a robotics-specific fund, and a young 'un at that. The VanEck Robotics ETF (IBOT), launched on April 5, 2023, seeks to replicate the performance of the BlueStar Robotics Index, which tracks companies involved in robotics.
"Advances in technology and efficiency continue to drive down cost as well as make robots much more capable. More companies are finding it advantageous to implement robots because of the reduced cost and improved capabilities," VanEck says in its IBOT fund profile.
To capture this industrial automation, IBOT holds companies that generate at least 50% of their revenue from one or more of seven subthemes deemed part of the investible universe. These include:
- Robots and manufacturing/industrial automation systems;
- Robotic surgical systems;
- 3D printing;
- Robotics or manufacturing computer aided design or other software;
- Semiconductor manufacturing systems;
- Machine vision; and
- Embedded machine learning chips.
Technology is the largest sector at 60%, followed by industrials at 34% and a smattering of consumer discretionary, healthcare and energy stocks. The 66-holding portfolio includes many of the same names that appear in other AI ETFs on this list: Nvidia, Keyence and ABB are among IBOT's top holdings.
And, again, you're getting plenty of international exposure by dipping into the robotics and AI space. The U.S. makes up just less than half of assets, followed by a large holding in Japanese stocks (19%) as well as shares in companies from Switzerland (8%) and Germany (7%), among other countries.
Learn more about IBOT at the VanEck provider site.
