Are these the best AI ETFs to watch in Q1 2025?
These five AI ETFs are top picks to watch in the coming months, chosen for their significant market valuations.
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Artificial Intelligence (AI) was the investing theme of 2023 – despite elevated interest rates, the big US tech stocks rose sharply in the year – with the ‘magnificent seven’ driving most of the gains within the S&P 500 and the NASDAQ. What's more, heightened interest in the theme has continued into 2024.
The poster child for the AI revolution arguably remains Nvidia, which now sports a gigantic $2.3 trillion valuation. In recent Q4 2024 results, the company saw revenue rise by 265% year-over-year and 22% quarter-on-quarter to a record $22.1 billion, driven by Data Centre revenue, which increased by 409% in the year to $18.4 billion.
CEO and founder Jensen Huang enthuses that ‘accelerated computing and generative AI have hit the tipping point. Demand is surging worldwide across companies, industries and nations.’
Arguably, the AI explosion was lit by the launch of OpenAI’s chatbot, ChatGPT, but artificial intelligence has long been used across sectors including entertainment, social media, art, retail, security, sports analytics, manufacturing, self-driving cars, healthcare, and warehousing alongside dozens of other sectors.
For perspective, ChatGPT garnered over 1 million users in just five days and now boasts over 150 million weekly active users. By contrast, it took Netflix three and a half years to hit the same milestone.
But for every OpenAI, dozens of companies will get nowhere close to profitability. This is the reality of entrepreneurialism in a growing space and can make investing in AI through diversified ETFs a more attractive choice for risk-averse investors looking to gain exposure to the theme.
Meanwhile, governments are deciding how to regulate the new technology, with the Council of Europe adopting its first binding international treaty on the use of AI systems, with 46 signature countries.
Best AI ETFs to watch
These ETFs are some of the most well-known AI funds on the market. Past performance is not a guide to future returns.
L&G Artificial Intelligence UCITS ETF (AIAI)
The L&G Artificial Intelligence UCITS ETF offers investors exposure to a carefully curated portfolio of global companies involved in the AI ecosystem.
This ETF tracks the ROBO Global Artificial Intelligence Index, focusing on businesses that are leading innovation in machine learning, natural language processing, and predictive analytics. It provides an opportunity for investors to benefit from the growth of AI technologies across multiple sectors, including healthcare, manufacturing, and finance.
AIAI has gained attention recently for its robust performance, which reflects the increased adoption of AI technologies globally. As industries rely more on automation and data-driven decision-making, companies within the ETF’s portfolio are well-positioned to drive significant revenue growth.
This ETF appeals to investors looking to tap into a long-term growth story, combining technological innovation with real-world applications that are transforming traditional industries.
WisdomTree Artificial Intelligence UCITS ETF (WTAI)
The WisdomTree Artificial Intelligence UCITS ETF is designed to capture the transformative potential of AI by investing in companies that develop or leverage this technology to enhance their business processes. It tracks the NASDAQ CTA Artificial Intelligence Index, which includes businesses from fields such as robotics, big data, and cloud computing.
With AI continuing to disrupt industries ranging from logistics to entertainment, WTAI stands out for its diversified exposure to this revolutionary sector. Recent reports highlight a surge in demand for AI-driven solutions, particularly in autonomous vehicles and personalised healthcare, both of which feature prominently in WTAI’s portfolio.
This ETF is an attractive option for those seeking to invest in cutting-edge technology companies with strong growth potential.
Global X Artificial Intelligence UCITS ETF (AIQU)
The Global X Artificial Intelligence UCITS ETF targets companies poised to benefit from the widespread integration of AI technologies into daily life.
Its portfolio includes firms involved in AI software, hardware, and enabling technologies such as semiconductor design. This ETF leverages the Solactive Artificial Intelligence Index, ensuring a balanced representation of established players and emerging innovators in the AI space.
Recent developments in generative AI and advancements in machine learning algorithms have brought AIQU into the spotlight. Companies within its portfolio are driving the next wave of AI adoption, from creating conversational AI tools to advancing cybersecurity measures.
For investors looking to gain exposure to both established giants and promising startups in the AI sector, AIQU offers a compelling proposition.
Invesco Artificial Intelligence Enablers UCITS ETF (IEAI)
The Invesco Artificial Intelligence Enablers UCITS ETF provides a unique angle on the AI revolution by focusing on companies that enable the development of AI technologies.
This includes firms specialising in data analytics, advanced chip manufacturing, and cloud-based solutions. The ETF tracks the S&P Kensho Global Artificial Intelligence Index, which captures the growth of companies enabling AI innovations.
Newsworthy trends in AI infrastructure, such as the rise of edge computing and the increasing reliance on AI to optimise supply chains, have boosted interest in IEAI. Its portfolio benefits from exposure to foundational technologies, which are critical to supporting the growing demand for AI applications.
This ETF appeals to investors seeking a foundational yet forward-thinking approach to the AI investment space.
Global X Robotics & Artificial Intelligence UCITS ETF (BOTZ)
The Global X Robotics & Artificial Intelligence UCITS ETF combines the power of robotics and AI by investing in companies at the forefront of these interlinked sectors.
BOTZ tracks the Indxx Global Robotics & Artificial Intelligence Thematic Index, which includes innovators in automation, machine learning, and robotic technologies.
As robotics increasingly intersects with AI to revolutionise industries such as manufacturing, healthcare, and defence, BOTZ has gained prominence for its strong thematic focus. Recent highlights include the growing adoption of robotic surgical systems and AI-driven manufacturing solutions, which offer operational efficiencies and cost savings.
BOTZ provides investors with an opportunity to capitalise on the synergy between AI and robotics, making it a smart choice for those interested in future-ready technologies.
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Top AI ETFs to watch summed up
These are just a selection of some of the top AI ETFs available. Always do your own research. Past performance is not a guide to future returns.
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