SAP will deepen collaboration with Microsoft on joint generative AI projects in the field of personnel recruiting, the German software maker announced on Monday.
Denmark's government has awarded energy group Orsted a 20-year contract to capture and store 430,000 tonnes of carbon dioxide emissions annually from two heat and power plants, the Danish company said on Monday.
Two of the three most widely followed indexes closed the past week in the red, while one ended in the green. The Nasdaq Composite advanced 0.4%, while the Dow Jones Industrial Average and the S&P 500 lost 1.1% and 0.3%, respectively.
The Vanguard Information Technology ETF (VGT) was launched on 01/26/2004, and is a passively managed exchange traded fund designed to offer broad exposure to the Technology - Broad segment of the equity market.
The Invesco Dynamic Large Cap Growth ETF (PWB) was launched on 03/03/2005, and is a passively managed exchange traded fund designed to offer broad exposure to the Large Cap Growth segment of the US equity market.
Microsoft (NASDAQ: MSFT) has rallied investors this year, with its stock up almost 30% since Jan. 1. The company has made Wall Street bullish with its developing venture into artificial intelligence (AI), a technology with the potential to enhance countless industries in the comi
The tech market has long been a haven for investors looking for reliable long-term stocks. The ever-developing nature of the sector has fueled substantial growth over the years, with the Nasdaq-100 index up about 330% over the last decade.
We're on the trail of the future, and it's paved with artificial intelligence (AI). Today, we'll examine some towering behemoths of the AI world, but we will also visit a few lesser-known nooks and crannies where surprising opportunities lie in wait. Much like a well-trained neur
Advances in
artificial intelligence (AI) have captured the attention of both investors and the broader public this year. While investors are excited about the possibilities that AI can unlock, we’re still in the early innings of the AI revolution, and the long-term winners in this field are yet to be determined.
That’s why it makes a lot of sense to approach investing in the space by using a well-diversified ETF like the
iShares Robotics and Artificial Intelligence ETF (
NYSEARCA:IRBO)
. IRBO invests across a wide swath of stocks that have different types of involvement in AI today, giving investors plenty of shots on goal when it comes to capitalizing on the long-term growth of AI.
Broad Diversification
This $304 million ETF from BlackRock’s (
NYSE:BLK
) iShares “seeks to track the investment results of an index composed of developed and emerging market companies that could benefit from the long-term growth and innovation in robotics technologies and artificial intelligence,” according to iShares.
IRBO offers broad diversification in this pursuit. Not only does it hold 118 different positions, but its top 10 positions make up just 13.4% of the fund, so this isn’t an ETF that is dominated by just a handful of positions. Top holding Meta Platforms (
NASDAQ:META
) comes in at a small 1.6% weighting. This stands in contrast to other popular AI ETFs like the
Global X Robotics and Artificial Intelligence ETF (
NASDAQ:BOTZ)
, where the top holding Intuitive Surgical (
NASDAQ:ISRG
) has a nearly 10% weighting, or the
ARK Autonomous Technology & Robotics ETF (
BATS:ARKQ)
, where Tesla (
NASDAQ:TSLA
) makes up 13% of the fund. These aren’t bad ETFs, and they have performed strongly year-to-date, but IRBO’s differentiated and more diversified approach is appealing.
Below, you’ll find an overview of
IRBO’s top holdings using TipRanks’ holdings tool.
This strong diversification allows IRBO to invest across many different types of companies that are involved in different aspects of AI. For example, Meta Platforms isn’t getting quite the same level of buzz as its fellow FAANG stocks like Microsoft (
NASDAQ:MSFT
) and Alphabet (
NASDAQ:GOOGL
) when it comes to AI, but the company is working on plenty of exciting AI advances of its own. On May 11, Meta unveiled its "AI Sandbox," where advertisers can test out a suite of generative AI tools to create ads. Meta previously released tools like "Make-A-Scene" and "Make-A-Video," generative AI tools that can create images from audio and video from text. Additionally, its ImageBind AI learning model is capable of learning from text, audio, visual, and more in a manner that is getting closer to how humans learn.
IRBO’s top holdings also include semiconductor names like Nvidia (
NASDAQ:NVDA
) and Taiwan-based Alchip Technologies, which are crucial to powering AI applications.
Additionally, one surprising thing about IRBO is that while it isn't an international or emerging markets ETF, it's relatively diversified geographically -- just 52.5% of its holdings (as of March 31) are from the United States. China, Japan, and Taiwan all account for double-digit weightings.
Beyond the Usual Suspects
Beyond the usual suspects of mega-cap tech names and
semiconductor stocks, you’ll also find enterprise and consumer-facing software names that utilize AI in a variety of ways.
For example, top 10 holding Hubspot (
NYSE:HUBS
) is mostly thought of as a CRM platform, but it's adding to this platform with new AI-enhanced tools like Content Assistant, which “utilizes Open AI’s Chat GPT model” to help companies to create content by generating blog ideas, blog outlines, prospecting and marketing emails, and more.
This is a good example of a company using AI to complement its existing offerings, as this type of content can create leads, and managing leads and customers is HubSpot’s bread and butter.
Meanwhile, ChatSpot is a chatbot that sales reps using HubSpot can ask to enter client and lead data, send follow-up emails, and generate reports. HubSpot currently has waitlists for both products.
The second-largest holding, Spotify (
NYSE:SPOT
), likely isn’t a name that immediately comes to mind, but its new AI DJ uses AI to make even more personalized playlists and recommendations for users based on their tastes and listening habits.
Stay Smart
As you can see from the table above, while not every IRBO holding has a
Smart Score, its overall collection of Smart Scores is strong. The Smart Score is TipRanks’ proprietary quantitative stock scoring system that evaluates stocks on eight different market factors. The result is data-driven and does not require any human intervention. A Smart Score of 8 or above is the equivalent of an Outperform rating. Six of the eight holdings that have a Smart Score rank at an 8 or better. Hubspot, Nivida, and Spotify all have 'Perfect 10' ratings.
A Modest Valuation
Not only does IRBO offer investors access to over 100 AI-associated stocks, but it also does so at a reasonable valuation. The ETF has a moderate price-to-earnings ratio of 20.4. While this isn’t dirt cheap, it’s slightly cheaper than the average multiple for the S&P 500 (
SPX
), which currently has a P/E ratio of 23.9, meaning that investors are gaining exposure to many of the world’s most important and most innovative AI players at a discount to the broader market, and it’s hard to argue with that.
Investor Takeaway
IRBO is great for investors that are looking for diversified exposure to AI. It also provides this diversification for a reasonable price. Additionally, its expense ratio of 0.47% isn’t the lowest you’ll see, but it's actually
cheaper than the expense ratio of other major AI ETFs like BOTZ and ARKQ, which charge 0.69% and 0.75%, respectively, as you can see below.
Overall, this is a well-diversified, reasonably-priced ETF that gives investors broad exposure to the rise of AI, making it a solid choice for long-term investors to consider.
With an annualized total return of 13.3% over the past three years, IRBO has made money for its investors, but it should be acknowledged that it has slightly lagged broad-market ETFs like the
SPDR S&P 500 ETF Trust (
NYSEARCA:SPY)
and the tech-focused
Technology Select Sector SPDR Fund (
NYSEARCA:XLK)
, which have returned 14.4% and 19.2%, respectively, over the same timeframe. That being said, it could begin to outperform the broader market as interest in AI continues to pick up.
Disclosure
Advisors looking for quality exposure due to market uncertainty should consider opportunities down the cap spectrum. SPHQ is a favorite fund among investors for providing quality exposure, but investors may be missing out on smaller capitalization companies. For quality exposure to mid- and small-cap companies, investors can look to Invesco S&P MidCap Quality ETF (XMHQ) [...]
Read more at ETFtrends.com.
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