AI is everywhere right now, having finally shown its immediate value in the form of OpenAI’s ChatGPT. While it may or may not be the kind of threat to humanity that Silicon Valley types seem to think it could be, AI has entered a new phase where it’s set to impact all sorts of economic sectors. For those investors who want exposure not only to machine learning AI like ChatGPT but also AI’s overall impact, consider how AI supply chain ETFs can play an intriguing role in a portfolio this year.
What are the areas set to be impacted by AI? The end uses of AI may be pretty clear, from self-driving cars and automated tractors to stronger and stronger customer personalization and use of customer data on e-commerce platforms. But AI, as a transformational technology, can pull forward already-hot areas like semiconductors, software providers that help train or empower AI like cloud programmers, and, of course, the big giants.
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That’s the focus of a recent piece of research on AI overall from WisdomTree Investments. Taking a look at the giants like Microsoft (MSFT) as well as semiconductor leaders like Taiwan Semiconductor Manufacturing (TSM) and software names like UiPath (PATH), the research emphasizes not trying to pick one winner across the world of AI-impacted industries, but instead looking to invest in a diversified value-chain approach.
Each of those areas along that chain could benefit from AI, and that’s the focus of an ETF like the WisdomTree Artificial Intelligence and Innovation Fund (WTAI). Launched in 2021, WTAI tracks the WisdomTree Artificial Intelligence & Innovation Index and charges a 45 basis point (bps) fee, investing in an equal-weighted list of global names that generate at least 50% of revenue from AI and innovation activities across areas like software, semiconductors, and more while meeting certain ESG standards.
WTAI has added $2.5 million in net inflows over the last month while also returning a notable 16.9% YTD. AI is undoubtedly a burgeoning space, but with so many places to go for investors, there could be real value in AI supply chain ETFs that look to invest across the tech world. WTAI is an option to consider therein, and one to watch following a potent start to the year as markets face ongoing turmoil.
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