Looking Beyond the Big Names For AI Opportunities

When discussing artificial intelligence, the large companies like Microsoft, Tesla, or NVIDIA typically take up most of the oxygen. But Matthew Bartolini, managing director at State Street Global Advisors and head of SPDR Americas research, noted that “innovation happens down the cap spectrum.”

“Everyone knows the larger companies,” Bartolini said on a panel for VettaFi’s AI Symposium. “We like to look at companies a bit beneath the surface.”

See more: “The Benefits of Combining Active ETFs With AI

And if one were to look past the large-cap tech firms, they’d find that AI has a wide array of different uses. Firms within information technology, industrials, consumer staples, and consumer discretionary, among others all connect to artificial intelligence. It’s being used for such things as research & labs, cloud computing, and end-user applications.

For example, Bartolini cited a global water technology company called Xylem that uses AI to detect water leakage in pipes and sewers. Another company using AI in a completely different way is C3.ai, which creates the research capabilities for end-users like Xylem.

“AI is a nebulous topic that can mean a couple things,” Bartolini said, adding that it’s “not a specific sector.”

How Artificial Intelligence Connects the Dots

Fellow AI Symposium panelist Srineel Jalagani, senior director, strategy indices at S&P Dow Jones Indices, said AI has been “a main pillar of how [they]construct [their]indices” since S&P Global acquired next-gen analytics firm Kensho Technologies in 2018.

“AI has been helpful,” said Jalagani. “It helps us connect the dots.”

Per Jalagani, AI is a “productivity multiplier and efficiency enhancer” with scalable benefits. It also removes the subjectivity when engaged in the “laborious manual process” of picking stocks.

He added that AI lets S&P “can pick global stocks because the algorithms there now do a much better job analyzing the context of a specific theme.”

Targeting Companies Working on AI

For investors looking to invest in companies that are working on AI, Bartolini suggested they look into the SPDR S&P Kensho New Economies Composite ETF (KOMP). KOMP uses AI to identify companies involved in developing and producing new economy products and services. Meanwhile, the SPDR S&P Kensho Intelligent Structures ETF (SIMS) targets companies whose products and services are driving innovation behind intelligent infrastructure.

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