Top 4 Artificial Intelligence (AI) ETFs in 2024

Artificial intelligence (AI) is more pervasive in our lives than we realize. It powers the algorithms that organize our Netflix menu, expedites Amazon packages, and underlies the functionality of numerous smartphone apps.

If you’ve ever interacted with ChatGPT, the impressive OpenAI chatbot that can write code and answer complex questions, you’ve caught a glimpse of the cutting-edge advancements in AI. Major tech companies are racing to develop the leading AI chatbot, marking the next frontier in artificial intelligence.

If you’re interested in investing in AI companies but prefer not to individually select AI stocks, you have the option to invest in AI-focused exchange-traded funds (ETFs). These ETFs provide exposure to a diverse range of top AI companies, eliminating the need for extensive research and individual stock selection.

Top AI ETFs to Consider in 2024

Read on to discover more about each of these exceptional AI ETFs.

Global X Robotics & Artificial Intelligence ETF

Established in 2016, the Global X Robotics & Artificial Intelligence ETF (BOTZ 3.02%) is a fund designed to invest in companies that stand to benefit from the increasing adoption of robotics and AI. Its portfolio includes enterprises specializing in industrial robotics, automation, non-industrial robots, and autonomous vehicles.

BOTZ currently holds a portfolio of 44 stocks. The fund’s top five holdings, which collectively represent approximately 40% of its assets, are:

  • Keyence (KYCCF 1.85%): A Japanese company renowned for its factory automation products like sensors and scanners.
  • Fanuc (FANUY 0.53%): A Japanese manufacturer of factory automation products, including lasers, robots, and electric injection molding machines.
  • Intuitive Surgical (ISRG 0.43%): The creator of the da Vinci robotic surgical system, which enables precise and minimally invasive surgeries.
  • ABB (ABB 1.41%): A Swiss company producing industrial automation and robotics products for utilities and infrastructure.
  • NVIDIA (NVDA 24.37%): A semiconductor manufacturer whose chips are integral to various applications such as autonomous vehicles, virtual computing, and cryptocurrency mining. NVIDIA’s chips also play a central role in many AI technologies.

While the chart below demonstrates that the ETF has underperformed the S&P 500 (SNPINDEX:^GSPC) since its inception, it experienced a significant decline in 2022 during the broader tech stock sell-off.

BOTZ offers a modest dividend yield of 0.94% at the time of writing, but it primarily caters to growth-oriented investors. With an expense ratio of 0.68%, it is slightly higher than that of an index fund, but reasonable considering its performance history.

ROBO Global Robotics and Automation Index ETF

The ROBO Global Robotics and Automation Index ETF (ROBO 1.53%) focuses on companies that drive transformative innovations in robotics, automation, and AI. In addition to AI firms, ROBO invests in cloud computing and other technology companies.

ROBO holds a diversified portfolio of 80 different stocks, with no single holding accounting for more than 2.2% of the ETF’s value. The top five holdings make up approximately 9% of the total value and include Fanuc, as well as the following:

  • Harmonic Drive Systems (OTC:HSYDF): A Japanese company manufacturing equipment and components for industrial robots and semiconductor manufacturing.
  • IPG Photonics (Nasdaq:IPGP): A manufacturer of high-performance fiber lasers used in various industries, including medical devices and telecommunications.
  • Kardex Holding (KRDXF -4.38%): A Swiss logistics company providing automated storage solutions.
  • Samsara (IOT -3.75%): A software manufacturer specializing in fleet and equipment tracking.

Since its inception in 2013, ROBO has closely mirrored the performance of the S&P 500, as depicted in the chart below. When factoring in dividends, it slightly lags behind the broad-market index. ROBO offers a dividend yield of 1.42% and has an expense ratio of 0.95%.

iShares Robotics and Artificial Intelligence ETF

The iShares Robotics and Artificial Intelligence ETF (IRBO 0.84%) aims to track the results of an index composed of developed and emerging market companies that stand to benefit from long-term opportunities in robotics and AI.

Formed in 2018, IRBO currently manages less than $1 billion in assets. With a portfolio of 118 stocks, it offers investors a well-diversified option. Many of its top holdings provide exposure to fast-growing small-cap companies.

The fund’s top five investments, representing around 6% of IRBO’s assets, include:

  • Meitu (1357.HK): A Chinese holding company best known for its portfolio of photo and community apps.
  • iQIYI (Nasdaq:IQ): A Chinese company offering video streaming services and other video entertainment products.
  • Spotify (Nasdaq:SPOT): A popular audio streaming service.
  • Sumo Logic (Nasdaq:SUMO): A cloud software company providing data analytics and log management services.
  • Hello Group (Nasdaq:MOMO): A Chinese online dating company.

As illustrated in the chart below, IRBO has underperformed the S&P 500 since its inception, experiencing a decline during the tech stock crash in 2022.

IRBO boasts a competitive expense ratio of 0.47% and a dividend yield of 1.2%. Given its exposure to cloud stocks and chipmakers, its performance is likely to be influenced by the overall performance of these sectors rather than AI companies directly.

First Trust Nasdaq Artificial Intelligence & Robotics ETF

The First Trust Nasdaq Artificial Intelligence and Robotics ETF (ROBT 1.22%) seeks to track the Nasdaq CTA Artificial and Robotics Index, which comprises companies engaged in AI and robotics across technology, industrial, and other sectors.

Launched in 2018, this ETF experienced a surge during the pandemic, largely due to the fact that tech stocks make up over 60% of its holdings. The fund currently holds 108 stocks, with the top five being:

  • C3.ai (AI 2.01%): A provider of cloud software offering an artificial intelligence platform.
  • Atos (AEXAF 0.54%): A company specializing in digital transformation, providing analytics, AI, and automation services.
  • Pegasystems (Nasdaq:PEGA): A provider of a low-code software platform and similar tools.
  • ANSYS (Nasdaq:ANSS): A manufacturer of engineering simulation software.
  • Luminar Technologies (Nasdaq:LAZR): An automotive technology company supplying sensors for passenger cars.

The expense ratio of the First Trust ETF is 0.65%, and it offers a dividend yield of 0.86%. Although its trading history is relatively short, the chart below indicates that its performance closely aligns with the overall performance of the S&P 500.

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