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2 Top ETFs to Buy for AI Exposure

3 years 8 months ago
Artificial intelligence, -- specifically, ChatGPT -- has captured the imagination of investors and the general public in a way that no new technological innovation has since the launch of the iPhone. The AI-powered chatbot was only released on November 30th, 2022, but it's already shaking up business models and reshaping entire industries. For instance, shares of beleaguered Buzzfeed ( NASDAQ:BZFD )  soared on the mere mention that the company would use tools from ChatGPT parent company OpenAI to generate content. Meanwhile, Microsoft ( NASDAQ:MSFT ) announcing that its Bing search engine will incorporate answers from ChatGPT gave it a new weapon in its quest to chip away at Alphabet's ( NASDAQ:GOOGL ) longtime dominance in search. Impressively, ChatGPT has already passed the bar exam, and schools are scrambling to prevent students from using ChatGPT to complete essay assignments. Many investors are understandably eager to invest in this type of game-changing technology. Unfortunately, ChatGPT creator OpenAI is off-limits to the average investor because it is a private company. However, companies like Alphabet and Baidu ( NASDAQ:BIDU ) are developing their own consumer-facing AI offerings, and Tesla ( NASDAQ:TSLA ) is pioneering self-driving cars while semiconductor companies are providing the computing power that powers the space.  Rather than picking individual winners and losers, investors can gain broad-based exposure to the theme of artificial intelligence with ETFs. Here are two of the best ETFs for gaining exposure to the growth of artificial intelligence, like ChatGPT. 1. ARK Autonomous Technology and Robotics ETF ( ARKQ) Cathie Wood’s ARK Invest is no stranger to disruptive technologies like artificial intelligence. The ARK Autonomous Technology and Robotics ETF is an ETF that specifically focuses on the space. Regarding  ARKQ's top holdings, Tesla, which utilizes AI in autonomous driving, comes in at number one (14.2% weighting). UiPath ( NYSE:PATH ), known for using AI to create automated workflows, is also a top holding (6.9% weighting). Additionally, investors may be surprised to see names like Deere ( NYSE:DE ) in this fund because Deere is more associated with tractors than technology. However, it’s important to remember that Deere is incorporating AI into its agricultural equipment. Deere has been investing in AI and robotics for years and now has fully-autonomous tractors. Another holding, Kratos Defense ( NASDAQ:KTOS ) (7.1% weighting), is a defense contractor that makes unmanned systems. The fund is fairly concentrated, with just 38 holdings. The top 10 positions make up 64% of the total fund. ARKQ ETF has $949 million in assets under management. It has a neutral Smart Score of 7, and the consensus is that ARKQ is a Hold. The average price target for ARKQ stock is $58.38, which is a 18.5% premium from current levels. ARKQ posted a phenomenal return of 106.7% in 2020 and tacked on another 2.7% in 2021. However, the ETF fell 46.7% in 2022 as investor sentiment towards the technology sector soured thanks to rising inflation and higher interest rates. Perhaps unsurprisingly, thanks to the surge in investor interest in artificial intelligence, ARKQ is up nearly 22% year-to-date.  Overall, ARKQ looks like a useful tool for investors interested in gaining broad-based exposure to artificial intelligence as a whole, whether it's a quintessential tech stock like UiPath or an ag-tech company incorporating AI into its products like Deere. 2. VanEck Semiconductor ETF ( NASDAQ:SMH) My other pick for exposure to ChatGPT isn’t an artificial intelligence ETF but rather the VanEck Semiconductor ETF. Why? Because semiconductors are the picks and shovels that will power the AI revolution, and this ETF gives you exposure to the industry. All three of  SMH's top holdings have significant AI exposure.  Taiwan Semiconductor ( NYSE:TSM ) is the fund’s largest holding, having an 11.57% weighting. Taiwan Semiconductor makes the world’s smallest and most advanced chips. These chips are crucial to semiconductor companies that serve the AI market, such as Nvidia ( NASDAQ:NVDA ) and Advanced Micro Devices ( NASDAQ:AMD ), which are the fund’s second and third-largest holdings. Nvidia is making its own language learning models (like the ones that ChatGPT was trained on) and collaborating with Microsoft on a supercomputer to handle AI workloads. Also, AMD is in the middle of developing several AI projects of its own. SMH even incorporates stocks like Lam Research ( NASDAQ:LRCX ) and ASML Holdings ( NASDAQ:ASML ). These companies provide and service the high-end equipment that semiconductor makers need to make chips.  Like ARKQ, the Van Eck Semiconductor ETF is relatively concentrated, holding just 26 positions. The top two holdings, Taiwan Semiconductor and Nvidia, make up about 22% of the fund. The top 10 positions account for 59.4% of the fund's assets. SMH is a large ETF with $7.7 billion in assets under management. SMH has a Smart Score of 8, giving it an outperform rating. Further, the consensus is that SMH is a Moderate Buy, and the average SMH stock price target of $267.16 indicates 7.9% upside potential from here. Lastly, blogger sentiment is bullish, and the hedge fund trend is positive. The VanEck Semiconductor ETF posted an impressive 55% gain in 2020 and followed it up with a 42% gain in 2021. However, it plummeted 33% in 2022 as investors worried about an oversupply of semiconductors and a slowing economy. Like ARKQ, SMH has rebounded strongly so far in 2023, with a 23% year-to-date gain. The Takeaway After a challenging 2022 for tech stocks, excitement over generative AI has breathed new life into the tech sector. The pace at which technologies like ChatGPT have hit critical mass has been incredible. The ARK Autonomous Technology & Robotics ETF is a great way to gain exposure to artificial intelligence in all its forms. This includes both self-driving cars like Tesla and companies that are incorporating AI into AgTech like Deere. The VanEck Semiconductor ETF is not strictly focused on AI, but semiconductors are the fuel that will feed the AI fire. SMH stock is a great way to get exposure to the space. The top three holdings, Taiwan Semiconductor, Nvidia, and Advanced Micro Devices, will all be crucial to the growth of AI. Taking all this in, both ETFs look like sensible ways to gain exposure to the new technological age that ChatGPT is ushering in. Disclosure
TipRanks

2 Top ETFs to Buy for Artificial Intelligence Exposure

3 years 8 months ago
Artificial intelligence, -- specifically, ChatGPT -- has captured the imagination of investors and the general public in a way that no new technological innovation has since the launch of the iPhone. The AI-powered chatbot was only released on November 30th, 2022, but it's already shaking up business models and reshaping entire industries. For instance, shares of beleaguered Buzzfeed ( NASDAQ:BZFD )  soared on the mere mention that the company would use tools from ChatGPT parent company OpenAI to generate content. Meanwhile, Microsoft ( NASDAQ:MSFT ) announcing that its Bing search engine will incorporate answers from ChatGPT gave it a new weapon in its quest to chip away at Alphabet's ( NASDAQ:GOOGL ) longtime dominance in search. Impressively, ChatGPT has already passed the bar exam, and schools are scrambling to prevent students from using ChatGPT to complete essay assignments. Many investors are understandably eager to invest in this type of game-changing technology. Unfortunately, ChatGPT creator OpenAI is off-limits to the average investor because it is a private company. However, companies like Alphabet and Baidu ( NASDAQ:BIDU ) are developing their own consumer-facing AI offerings, and Tesla ( NASDAQ:TSLA ) is pioneering self-driving cars while semiconductor companies are providing the computing power that powers the space.  Rather than picking individual winners and losers, investors can gain broad-based exposure to the theme of artificial intelligence with ETFs. Here are two of the best ETFs for gaining exposure to the growth of artificial intelligence, like ChatGPT. 1. ARK Autonomous Technology and Robotics ETF ( ARKQ) Cathie Wood’s ARK Invest is no stranger to disruptive technologies like artificial intelligence. The ARK Autonomous Technology and Robotics ETF is an ETF that specifically focuses on the space. Regarding  ARKQ's top holdings, Tesla, which utilizes AI in autonomous driving, comes in at number one (14.2% weighting). UiPath ( NYSE:PATH ), known for using AI to create automated workflows, is also a top holding (6.9% weighting). Additionally, investors may be surprised to see names like Deere ( NYSE:DE ) in this fund because Deere is more associated with tractors than technology. However, it’s important to remember that Deere is incorporating AI into its agricultural equipment. Deere has been investing in AI and robotics for years and now has fully-autonomous tractors. Another holding, Kratos Defense ( NASDAQ:KTOS ) (7.1% weighting), is a defense contractor that makes unmanned systems. The fund is fairly concentrated, with just 38 holdings. The top 10 positions make up 64% of the total fund. ARKQ ETF has $949 million in assets under management. It has a neutral Smart Score of 7, and the consensus is that ARKQ is a Hold. The average price target for ARKQ stock is $58.38, which is a 18.5% premium from current levels. ARKQ posted a phenomenal return of 106.7% in 2020 and tacked on another 2.7% in 2021. However, the ETF fell 46.7% in 2022 as investor sentiment towards the technology sector soured thanks to rising inflation and higher interest rates. Perhaps unsurprisingly, thanks to the surge in investor interest in artificial intelligence, ARKQ is up nearly 22% year-to-date.  Overall, ARKQ looks like a useful tool for investors interested in gaining broad-based exposure to artificial intelligence as a whole, whether it's a quintessential tech stock like UiPath or an ag-tech company incorporating AI into its products like Deere. 2. VanEck Semiconductor ETF ( NASDAQ:SMH) My other pick for exposure to ChatGPT isn’t an artificial intelligence ETF but rather the VanEck Semiconductor ETF. Why? Because semiconductors are the picks and shovels that will power the AI revolution, and this ETF gives you exposure to the industry. All three of  SMH's top holdings have significant AI exposure.  Taiwan Semiconductor ( NYSE:TSM ) is the fund’s largest holding, having an 11.57% weighting. Taiwan Semiconductor makes the world’s smallest and most advanced chips. These chips are crucial to semiconductor companies that serve the AI market, such as Nvidia ( NASDAQ:NVDA ) and Advanced Micro Devices ( NASDAQ:AMD ), which are the fund’s second and third-largest holdings. Nvidia is making its own language learning models (like the ones that ChatGPT was trained on) and collaborating with Microsoft on a supercomputer to handle AI workloads. Also, AMD is in the middle of developing several AI projects of its own. SMH even incorporates stocks like Lam Research ( NASDAQ:LRCX ) and ASML Holdings ( NASDAQ:ASML ). These companies provide and service the high-end equipment that semiconductor makers need to make chips.  Like ARKQ, the Van Eck Semiconductor ETF is relatively concentrated, holding just 26 positions. The top two holdings, Taiwan Semiconductor and Nvidia, make up about 22% of the fund. The top 10 positions account for 59.4% of the fund's assets. SMH is a large ETF with $7.7 billion in assets under management. SMH has a Smart Score of 8, giving it an outperform rating. Further, the consensus is that SMH is a Moderate Buy, and the average SMH stock price target of $267.16 indicates 7.9% upside potential from here. Lastly, blogger sentiment is bullish, and the hedge fund trend is positive. The VanEck Semiconductor ETF posted an impressive 55% gain in 2020 and followed it up with a 42% gain in 2021. However, it plummeted 33% in 2022 as investors worried about an oversupply of semiconductors and a slowing economy. Like ARKQ, SMH has rebounded strongly so far in 2023, with a 23% year-to-date gain. The Takeaway After a challenging 2022 for tech stocks, excitement over generative AI has breathed new life into the tech sector. The pace at which technologies like ChatGPT have hit critical mass has been incredible. The ARK Autonomous Technology & Robotics ETF is a great way to gain exposure to artificial intelligence in all its forms. This includes both self-driving cars like Tesla and companies that are incorporating AI into AgTech like Deere. The VanEck Semiconductor ETF is not strictly focused on AI, but semiconductors are the fuel that will feed the AI fire. SMH stock is a great way to get exposure to the space. The top three holdings, Taiwan Semiconductor, Nvidia, and Advanced Micro Devices, will all be crucial to the growth of AI. Taking all this in, both ETFs look like sensible ways to gain exposure to the new technological age that ChatGPT is ushering in. Disclosure
TipRanks

Best Growth Stock to Buy: Tesla Stock vs. Nvidia Stock

3 years 8 months ago
Tesla (NASDAQ: TSLA) is riding a secular tailwind as consumer adoption of electric vehicles, or EVs, soars. Meanwhile, Nvidia (NASDAQ: NVDA) faces near-term headwinds with more inventory than it would like. This video will answer which is the better growth stock to buy.
The Motley Fool

See Which Of The Latest 13F Filers Holds NVIDIA

3 years 8 months ago
At Holdings Channel, we have reviewed the latest batch of the 26 most recent 13F filings for the 12/31/2022 reporting period, and noticed that NVIDIA Corp (Symbol: NVDA) was held by 11 of these funds. When hedge fund managers appear to be thinking alike, we find it is a good ide
BNK Invest

Warren Buffett's Secret Portfolio Owns 3 Brand-Name AI Stocks

3 years 8 months ago
For nearly six decades, Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) CEO Warren Buffett has been nothing short of a money machine for his shareholders. The Oracle of Omaha, as he's come to be known, has practically doubled up the average annual total return of the S&P 500 si
The Motley Fool

2 Laggards of 2022 are Outperforming in 2023; Should You Invest?

3 years 8 months ago
Tesla ( NASDAQ:TSLA ) and Nvidia ( NASDAQ:NVDA ) stocks declined over 65% and 50%, respectively, in 2022, significantly underperforming the benchmark index. However, both of these stocks quickly recovered in 2023. TSLA gained about 60%, while NVDA marked an increase of approximately 46% year-to-date. While both of these stocks outperformed the S&P 500 Index ( SPX ) this year, analysts’ one-year price targets show limited or no further upside. Let’s dig deeper.   Is Tesla Stock Likely to Go Up? The consensus 12-month price target of $199.78 on TSLA stock suggests a limited upside of 1.47% over the next 12 months. Notably, Tesla stock jumped this year following its CEO  Elon Musk’s positive commentary about demand and production during the Q4 (fourth quarter) conference call. Meanwhile, the company is seeing solid orders that are outpacing production.  However, economic uncertainty and pressure on consumer spending indicate a contraction in the automotive market in 2023, which could restrict the upside.  Tesla stock has received 21 Buys, six Holds, and three Sells for a Moderate Buy consensus rating. While analysts see limited upside, hedge funds are bullish about TSLA stock. Our data shows that hedge funds  bought 1.2M shares of TSLA last quarter. Overall, TSLA stock has an Outperform Score of nine on TipRanks. What is the Prediction for Nvidia Stock?  The demand uncertainty, slowdown in the end market, and inventory issues dragged  NVDA stock lower in 2022. However, inventory issues are waning, which is a positive for semiconductor stocks like NVDA. Furthermore, the company will likely benefit from new products, including AI (artificial intelligence) and high-performance computing applications. In addition, Nvidia will likely benefit from the momentum in the Data Center segment. The company is returning a significant amount of cash to its shareholders through share buybacks and dividends. However, positives appear to be priced in. Also, global macroeconomic uncertainty could pose challenges in the short term.  Nvidia stock has a Strong Buy consensus rating on TipRanks based on 22 Buy, five Hold, and one Sell recommendations. However, analysts’ average price target of $209.19 implies a downside of 1.63% from current levels. Besides for analysts, hedge funds are also bullish about NVDA stock. Hedge funds bought 10.2M shares in the last three months. Also, NVDA stock  scores a “Perfect 10” on TipRanks’ Smart Score system. Note: Shares with a  “Perfect 10” Smart Score have historically outperformed the benchmark index.  Bottom Line TSLA and NVDA stocks outperformed the broader markets in 2023. Moreover, both of these companies have an Outperform Smart Score on TipRanks. However, given the recent surge in their stock prices, the positives appear to be priced in.  Disclosure
TipRanks

A Bull Market Is Coming: 5 Killer Growth Stocks I Just Bought

3 years 8 months ago
The past year was tough for investors. 2022 was marked by historically high inflation, rising interest rates, and the worst market downturn in over a decade. Each of the three major market indexes fell into bear market territory last year, and even the best growth stocks weren't
The Motley Fool

Better Data Center Stock: Intel vs. Nvidia

3 years 8 months ago
In today's video, Jose Najarro and Nick Rossolillo discuss why Intel (NASDAQ: INTC) investors should keep a close eye on not only Advanced Micro Devices (NASDAQ: AMD) but also Nvidia (NASDAQ: NVDA). Check out the short video to learn more, consider subscribing, and click the spec
The Motley Fool
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