Artificial intelligence (AI) isn’t a new concept. This year, the phrase “early innings” has been frequently attached to the related investment thesis. That’s good news for investors that are worried they missed the run on AI equities.
Market participants that want to access the potential offered by the AI investment thesis while eschewing stock picking have their choice of relevant ETFs. That group includes the Invesco QQQ Trust (QQQ) and the Invesco NASDAQ 100 ETF (QQQM).
QQQ and QQQM aren’t dedicated AI ETFs. Even so, the funds offer ample exposure to the AI and machine learning booms. They especially offer this by way of familiar large-cap stocks. That could be an appealing trait for market participants looking to wade into the early stages of AI growth without taking on the risk associated with smaller stocks.
“We are currently in the very early stages of a technology that will undoubtedly change our lives. In the nearer term, the integration of generative AI and predictive analytics, and the optimization of semiconductor production are areas of tech we believe will enable the proliferation of AI and, as a result, benefit from this rollout,” according to Goldman Sachs Asset Management (GSAM).
QQQ, QQQM Credible Generative AI Plays
One of the AI concepts investors are hearing the most about this year is generative AI. That’s a machine learning process that, with prompts from a human user, can generate text, images, and other media.
“While previous iterations of AI have required human direction, machine learning is able to observe data patterns with little to no human intervention to make decisions. After forming a database, generative AI then utilizes deep learning, which uses complex algorithms modeled on the human brain to create content,” added GSAM.
Generative AI is both business- and consumer-facing, underscoring an attractive long-term investment thesis. Some forecasts predict that the related software market for generative AI will balloon to $121 billion in the years ahead. There are also predictions that the overall economic output driven by this form of AI will hit trillions of dollars.
QQQ and QQQM holdings with generative AI exposure include Microsoft (NASDAQ: MSFT), Alphabet (NASDAQ: GOOG), and Meta Platforms (NASDAQ: META). Beyond that, there’s significant AI opportunity for semiconductor companies — a slew of which call QQQ and QQQM home.
“With AI increasing in relevance for businesses and consumers, the infrastructure to support this new volume and overall buildout of capabilities will need a substantial upgrade. AI servers will require 10x the memory content of a traditional server, requiring innovative new chips and processes to develop them en masse,” concluded GSAM.
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