Diversification Needed to Capitalize on AI Investing Opportunities

Ask investors — likely both professional and retail — what individual stock they most readily associated with artificial intelligence (AI). Chances are the bulk of those queried will reply with “semiconductor giant Nvidia (NVDA).”

That’s a reasonable response, particularly when considering Nvidia’s dominant positioning in AI computing. Nvidia also explains why ETFs, including the Invesco QQQ Trust (QQQ) and the Invesco NASDAQ 100 ETF (QQQM), with large weights to the stock have thrived.

Speaking of ETFs with AI ties, of which QQQ and QQQQM fit the bill, those investment products could be increasingly relevant at a time when some market observers believe investors should look beyond Nvidia and embrace diversification as an avenue for best capitalizing on the long-term potential of the AI investment thesis.

QQQ, QQQM Have AI Diversification

QQQ and QQQM, which have the same rosters, allocate 6.34% of their weights to Nvidia. That company is that the ETFs’ third-largest holding from the technology sector. But there’s much more to the funds’ AI stories. And that’s a positive for long-term investors.

“However, to build long-term, sustainable wealth, investors should diversify their AI investments beyond Nvidia and explore opportunities in emerging players and niche segments of the market,” noted deVere Group CEO Nigel Green.

He adds that the AI opportunity set is expansive and includes things such as algorithm construction and edge computing. Both of those could boost long-term demand for hardware and software. And that could be a plus for QQQ and QQQM. That’s because the ETFs feature substantial exposure to hardware and software providers.

“Investing in these companies allows investors to capitalize on niche markets and tech advancements that may not be fully captured by industry giants like Nvidia,” observed Green. “Furthermore, investors should consider opportunities in AI-enabled industries beyond technology.”

Artificial intelligence also intersects with a variety of sectors and industries beyond technology. The Invesco ETFs are positioned to capitalize on that trend.

“AI is transforming sectors such as healthcare, finance, and manufacturing, creating new investment opportunities outside the realm of pure technology companies. For example, healthcare companies leveraging AI for drug discovery or personalized medicine present compelling investment prospects with long-term growth potential,” concluded Green.

Specific to the healthcare and industrial sectors, those groups combine for about 11% of the QQQ/QQQM rosters.

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