In afternoon trading on Tuesday, Materials stocks are the best performing sector, not showing much of a loss. Within that group, Ecolab Inc (Symbol: ECL) and Howmet Aerospace Inc (Symbol: HWM) are two large stocks leading the way, showing a gain of 5.2% and 4.1%, respectively.
Investors can harness the power of entire indices by adding ETFs focusing on the Dow Jones (
DJIA
), S&P 500 (
SPX
), and Nasdaq 100 (
NDX
) to their portfolios. Investing can be complex, but it can also be very simple. Simply investing in these three major U.S. indices would have generated significant returns over the past decade. Over the past 10 years, the Dow, S&P 500, and NASDAQ have gained 144%, 172%, and 272%, respectively.
It wouldn't be feasible to invest in all 500 stocks of the S&P 500, for example. However, you can add an S&P 500 ETF to your portfolio, giving you ample diversification and exposure to the growth of hundreds of the best companies in the United States. It's sensible for all investors to have some exposure to the broader indices, and it's a great way for new investors to start their portfolios with instant diversification.
Investors can use these three ETFs to add the breadth and depth of these three indices to their portfolios.
Vanguard S&P 500 ETF (
NYSEARCA:VOO)
Investing in the Vanguard S&P 500 ETF is an effective way to gain exposure to the power of the S&P 500 as a whole. This massive ETF has $281 billion in assets under management.
As you might expect, since it covers the entire S&P 500, VOO ETF is very diversified with 506 holdings, and
VOO's top 10 holdings only make up
24.3% of the fund, essentially mirroring the concentration of the S&P 500 itself. The Vanguard S&P 500's top holding is the largest stock in the S&P 500 by market cap, Apple (
NASDAQ:AAPL
), which accounts for 6% of the fund.
The rest of the top 10 is rounded out by familiar names, including tech giants like Microsoft (
NASDAQ:MSFT
), Alphabet (
NASDAQ:GOOGL
), Amazon (
NASDAQ:AMZN
), Tesla (
NASDAQ:TSLA
), and Nvidia (
NASDAQ:NVDA
), as well as large-cap stocks from other sectors like Berkshire Hathaway (
NYSE:BRK.A
) (
NYSE:BRK.B
), ExxonMobil (
NYSE:XOM
), and UnitedHealth Group (
NYSE:UNH
).
VOO pays a dividend and currently yields 1.6%, which is roughly in line with the average yield of the S&P 500. Vanguard is known for its low-cost funds and ETFs, and VOO is no different, with a minuscule expense ratio of just 0.03%.
The Vanguard S&P 500 ETF has a favorable Smart Score of 8. Its average analyst price target of $421.99 indicates upside of 11.3% from current levels. Blogger sentiment is bullish, while hedge fund involvement is decreasing.
Last year, VOO stock fell 18.2%, closely tracking the performance of the S&P 500. However, things are looking up in 2023 as the ETF is up 8.4% year to date. Ultimately, the Vanguard S&P 500 is an efficacious and cost-effective way to add exposure to the entire S&P 500 to your portfolio.
Invesco QQQ Trust (
NASDAQ:QQQ)
The Invesco QQQ Trust ETF, often referred to colloquially as "The Q's," is a massive $161 billion ETF that invests in the 100 largest non-financial companies in the Nasdaq.
The Nasdaq is the index that is most closely associated with the technology sector, so it is unsurprising that most of
QQQ's top holdings here are the same tech stocks that make up VOO’s top holdings. Stocks like Microsoft, Apple, Amazon, Alphabet, NVIDIA, Meta Platforms (
NASDAQ:META
), and Tesla dominate the top 10 holdings. Pepsi (
NASDAQ:PEP
) is the one notable non-tech stock amongst the top 10 holdings.
While QQQ is a diversified ETF with 102 holdings, it is much more concentrated than VOO. Its top 10 holdings make up 53.2% of the fund. Like VOO, QQQ pays a dividend and currently yields 0.7%.
The Invesco QQQ Trust has a positive ETF smart score of 8 out of 10, indicating an Outperform rating, and the consensus price target of $341.20 implies 11.5% upside from today’s prices. Meanwhile, blogger sentiment is positive, while hedge fund involvement is decreasing.
Tech stocks had a tough go of it in 2022, so it's unsurprising that QQQ lost 32.5% last year. However, investor enthusiasm for tech has returned in 2023, and QQQ has soared to a 13.3% gain year-to-date. Overall, the Invesco QQQ Trust is a cost-effective way (0.20% expense ratio) to add the innovation of the large-cap tech stocks in the Nasdaq 100 to your portfolio.
SPDR Dow Jones Industrial Average ETF (
NYSEARCA:DIA)
In some ways, the much larger S&P 500 has overtaken the Dow Jones Industrial Average as the dominant barometer for the U.S. economy. However, the Dow Jones is still viewed as a blue-chip index of world-class companies.
Being in the Dow Jones Industrial Average essentially screens out “bad." This is because Dow components have to be profitable and must have an excellent reputation, sustained growth, and be of interest to a large number of investors, according to S&P Global (
NYSE:SPGI
) (the company that maintains both the S&P 500 and Dow Jones Industrial Average).
The Dow Jones only includes 30 companies, so the SPDR Dow Jones Industrial Average ETF is naturally much more concentrated than the S&P 500 or Nasdaq ETFs listed above. The ETF has 31 holdings, and
DIA's top 10 holdings make up 55.2% of the fund.
Unlike the S&P 500 or the Nasdaq, the Dow is a price-weighted index, so high-priced Dow components like UnitedHealth have an outsize position in the fund. UNH, the health insurance giant, makes up nearly 10% of the fund.
The rest of the top 10 is essentially a who's who of iconic U.S. companies like Goldman Sachs (
NYSE:GS
), Home Depot (
NYSE:HD
), McDonald’s (
NYSE:MCD
), Caterpillar (
NYSE:CAT
), and Visa (
NYSE:V
), with Microsoft serving as the lone representative from ‘big tech.’
Because DIA isn’t as exposed to tech as VOO or QQQ, it soundly outperformed both ETFs last year (just as the Dow itself outperformed the S&P 500 and the Nasdaq), with a loss of 7% for 2022. However, as you might guess, DIA is lagging behind these two counterparts as tech rebounds in 2023, with a 2.4% gain year-to-date.
The SPDR Dow Jones Industrial Average ETF Trust has a neutral ETF Smart Score of 7. Further, the average DIA stock price target of $370.67 indicates upside potential of 8.7% from current pricing.
Like the other two ETFs above, DIA pays a dividend and yields 1.9%. Like its counterparts, it also features an investor-friendly expense ratio of 0.16%.
Investor Takeaway
In conclusion, history shows that investing in indices like the Dow, S&P 500, and Nasdaq is a fruitful way to invest over the long term. These 3 ETFs offer investors a way to gain exposure to each index in an effective, easy, and inexpensive manner.
All three of these indices look like sensible investments over the long term. Note that the Dow outperformed the others last year, thanks to its lower exposure to tech, while the QQQ is outperforming this year as tech rebounds. The VOO ETF may be the best way to get "the best of both worlds" as it features a mix of tech stocks and “old economy” stocks.
Disclosure
Artificial Intelligence stocks have been surging on the back of the hype surrounding ChatGPT, the viral AI chatbot that reached 100 million users in just two months.
What happened
Shares of Nvidia (NASDAQ: NVDA) were rising 4.6% at 10:34 a.m. ET Tuesday morning after a Bank of America analyst raised his price target on the chipmaker.
Wall Street's main indexes edged higher on Tuesday, as gains in growth stocks such as Tesla and Nvidia outweighed worries that the Federal Reserve will likely stay on its rate-hike path this year after data pointed to still-elevated inflation.
Most retail investors get into the market with the intention of growing their investments. How they go about it and what level of risk they are willing to accept are the main differentiators for what kind of investor they end up being.
Nvidia's (NASDAQ: NVDA) stock has shot up over 51,000% since it went public in 1999. And with its 45% rise year to date, it might feel like the best time to buy this tech stock is well past. However, Nvidia is a growth stock for a reason, with its crucial role in developing futur
Some of Wall Street's most speculative names, including meme stocks and shares of artificial intelligence companies, are leading the equity market rally this year, helped by renewed interest from retail investors.
Investors have regained confidence in technology stocks once again in 2023 amid favorable economic data points such as cooling inflation and a resilient global economy. The International Monetary Fund raised its global growth forecast from 2.7% to 2.9%, and that's no doubt aided
Some of Wall Street's most speculative names, including meme stocks and shares of artificial intelligence companies, are leading the equity market rally this year, helped by renewed interest from retail investors.
Artificial intelligence stocks are having their moment, or, more accurately, another moment, following the public success of ChatGPT in recent months. This is leading to a lot of chasing the "next big thing," which often leads to losses. Instead of chasing some speculative invest
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
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
Wall Street closed sharply higher on Monday as investors awaited inflation data likely to hint at the path of the Federal Reserve's future interest rate hikes, while Meta Platforms gained after a report that the Facebook parent was planning fresh layoffs.
Wall Street closed higher on Monday as investors awaited inflation data likely to hint at the path of the Federal Reserve's future interest rate hikes, while Meta Platforms gained after a report that the Facebook parent was planning fresh layoffs.
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.
Wall Street rallied on Monday as investors awaited inflation data likely to hint at the path of the Federal Reserve's future interest rate hikes, while Meta Platforms gained after a report said the Facebook parent was planning fresh layoffs.
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
Nvidia (NVDA) has been one of the most searched-for stocks on Zacks.com lately. So, you might want to look at some of the facts that could shape the stock's performance in the near term.
The three most widely followed indexes ended the week in the red, with the tech-heavy Nasdaq snapping a five-week winning streak. The Dow Jones Industrial Average fell for the second straight week, declining 0.2%, while the S&P 500 and the Nasdaq Composite shed 1.1% a