AI Battle Is Brewing in These ETFs | ETF Trends

To say that the artificial intelligence (AI) investment thesis is gaining momentum in 2023 is an understatement. It’s undergoing a renaissance, and that could prove to be durable.

Fortunately for investors, dozens of exchange traded funds, including some dedicated AI and robotics offerings, are up to the task. In AI ETF conversation, some familiar, plain vanilla funds also merit consideration, a group including the Invesco QQQ Trust (QQQ) and the Invesco NASDAQ 100 ETF (QQQM).

QQQ and QQQM both track the Nasdaq 100 Index (NDX) — a benchmark with a well-documented history of leanings to disruptive and innovative technologies. AI certainly fits in those categories. As such, it’s not surprising that some QQQ and QQQM member firms are already emerging as AI leaders. Those include Microsoft (NASDAQ:MSFT) and Google parent Alphabet (NASDAQ:GOOG).

Microsoft is a major investor in OpenAI’s ChatGPT, and there’s speculation that investment is poised to increase. Likewise, Alphabet is ramping up its own competitor to ChatGPT known as Bard.

“Alphabet tested its ChatGPT competitor known as Bard and revealed it to the world Monday. Microsoft on Tuesday announced new AI features for its Bing search browser. Bard’s debut comes just weeks after management said that rolling out AI chat tools too quickly could hinder the company’s reputation. CNBC previously reported the company was testing the product internally among employees,” reported Samantha Subin for CNBC.

The move into artificial intelligence could be seen as part of an ongoing evolution for both Alphabet and Microsoft. Both companies know the technology industry isn’t about what was accomplished yesterday, but what can be delivered tomorrow. Some market observers believe AI can serve as a centerpiece in terms of new product offerings by big tech, and potentially, as a driver of long-term returns.

“The push into AI comes as both Alphabet and Microsoft reinvent their businesses and kickstart the next phase of growth after shares of both companies plummeted during last year’s market carnage. The washout brought a long-overdue reality check to the tech sector,” according to CNBC.

Microsoft and Alphabet combine for about 19.5% of the QQQ and QQQM rosters. That’s substantial, but the ETFs’ exposure to AI-related companies extends beyond that duo. For example, Apple (NASDAQ:AAPL) and Meta Platforms (NASDAQ:META) are seen as credible AI contenders as well, and that pair combines for more than 15% of the QQQ and QQQM rosters.

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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.