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Investing in Technology and AI: ETFs to Consider
Stick with What's Working
Investors looking for opportunities in the market may want to consider sticking with technology and artificial intelligence (AI) plays. Todd Sohn, ETF and technical strategist at Strategas, recommends Roundhill Generative AI and Technology ETF (CHAT) for exposure to AI. Sohn likes that CHAT is actively managed and believes it is a good option to gauge the demand for AI. Another recommended ETF is Global X Robotics & Artificial Intelligence ETF (BOTZ), which offers exposure to the industrial sector in addition to technology. Both of these ETFs have shown strong performance this year.
The Limits of AI Investing
While there are benefits to investing in AI, Dave Nadig, financial futurist at VettaFi, believes that it can be difficult to pick specific companies that will be the biggest beneficiaries. He suggests focusing on industries such as industrials, robotics, and automation, which are well-positioned for growth. Nadig warns against overexposure to tech giants like Google, Microsoft, Apple, and Nvidia, as these stocks are already widely owned. Instead, investors should consider ETFs that provide broad exposure to sectors beyond technology.
ETFs for a Broader Market
For investors who believe that the market will broaden out beyond technology, there are several recommended ETFs. Sohn suggests the Invesco S&P 500 Equal Weight ETF (RSP) and the Vanguard Extended Market Index Fund (VXF), both of which are generating positive returns this year. Nadig recommends the JPMorgan Equity Premium Income ETF (JEPI), which has been a popular choice for investors and has delivered good results. These ETFs provide opportunities for investors to diversify their portfolios and potentially benefit from sectors other than technology.
In conclusion, investors looking to capitalize on the growth of technology and AI should consider ETFs that offer exposure to these areas. Additionally, diversifying into industries such as industrials, robotics, and automation can provide opportunities for further gains. By investing in ETFs that cover a broader range of sectors, investors can position themselves for success in the evolving market.
Investing in Technology and AI - Implications for New Businesses
The rapid growth of technology and artificial intelligence (AI) presents both opportunities and challenges for new businesses entering the market. While investing in ETFs that provide exposure to technology and AI can be a profitable move, it is crucial for new businesses to understand the limitations and broader implications of this trend.
One "hot take" to consider is that new businesses should not solely rely on the success of specific companies in the AI sector. As Dave Nadig suggests, focusing on industries such as industrials, robotics, and automation can position new businesses for growth in alignment with the expanding AI market. By exploring complementary sectors, new businesses can tap into the potential demand for AI-driven solutions while diversifying their offerings.
Moreover, it is important for new businesses to be mindful of the potential risks associated with overexposure to already dominant tech giants. Instead of solely investing in individual stocks, new businesses may benefit from considering ETFs that provide broad exposure to sectors beyond technology. Such diversification can mitigate market volatility and enhance long-term performance.
In conclusion, while investing in technology and AI-related ETFs can be a part of a sound investment strategy, new businesses must also focus on differentiation and identifying growth opportunities in sectors beyond technology. By understanding the potential of AI-driven solutions in industries like industrials, robotics, and automation, new businesses can position themselves to thrive in the evolving market landscape and capitalize on the demand for innovative technologies.
Article First Published at: https://www.cnbc.com/2023/07/08/ai-tech-plays-for-2023s-second-half-.html
