Artificial intelligence investing need not be difficult. And while “easy” doesn’t mean higher returns, investors have avenues for accessing AI-related investing efficiencies.
The Invesco Top QQQ ETF (QBIG) is a prime example. The actively managed QBIG, which debuted last December, checks the boxes of easy to deploy and easy to understand. Put simply, QBIG holds eight stocks — the Magnificent Seven and Broadcom (AVGO). That is to say it’s hard to beat QBIG as an efficient proxy on mega-cap artificial intelligence stocks.
QBIG merits consideration because it eliminates the need for market participants to stock-pick. But it is also worth evaluating because even though it has a small lineup, it touches an array of AI segments. That’s worth noting. because as the disruptive technology matures, it will also expand. So the bigger players, including QBIG holdings, can more nimbly respond to new AI segments and use cases.
QBIG Can Solve for AI Sprawl
As is often said, artificial intelligence is still in its early innings. That implies progress can be made at a moment’s notice. And that can facilitate elevated expenditures — a scenario material to QBIG member firms. Take the cases of graphics processing units (GPUs) and other semiconductor fare.
“Continuous Graphics Processing Unit (GPU) advancements and widespread data availability make AI accessible to more businesses,” noted US Bank Wealth Management. “Cloud computing services, from brands including Amazon Web Services, Microsoft Azure, Google Cloud, Oracle and Meta. AI technology deployment remains expensive, yet increasing cost efficiency improves the economic viability for businesses and consumers.”
Excluding Oracle, all of the companies mentioned above are QBIG holdings. Speaking of the ETF’s portfolio, its stakes in Broadcom and Nvidia (NVDA) are notable. That’s because semiconductors are the backbones of the artificial intelligence revolution. As US Bank noted, chip evolution solves for some of the limitation issues currently facing early iterations of artificial intelligence.
“AI engines lack human-like comprehension, consciousness, and common sense. The models operate on statistical patterns and lack physical experience,” added the asset manager. “This limits AI engines’ understanding of the tangible world and nuances around abstract reasoning, complex ethics, and subtle human emotions.”
Bottom Line
The artificial intelligence investment thesis isn’t always smooth. And its youthful nature implies it won’t always be easy. But investors can mitigate some of those risks by considering a fund like QBIG over individual names.
“Not all AI applications have clear, sustainable profitability paths and investors increasingly require tangible return evidence on a company’s AI investment,” concluded US Bank. “If promised revolutionary changes do not materialize over coming months, investor sentiment across the AI ecosystem could sour. However, modest corrections and AI industry consolidation are part of markets’ normal ebb and flow. At present, AI and its related infrastructure retains a strong outlook trajectory.”
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