When it comes to stocks with the artificial intelligence (AI) label, Nvidia (NVDA) arguably takes the cake. So much so that earlier this week, the semiconductor giant briefly surpassed Microsoft (MSFT) as the world’s most valuable publicly traded company.
There’s no denying that Nvidia has rewarded investors’ faith. It’s been one of the best-performing mega-cap stocks over the past several years, boosting returns for exchange traded funds such as the Invesco QQQ Trust (QQQ) and the Invesco NASDAQ 100 ETF (QQQM) along the way.
Speaking of QQQ and QQQM, those ETFs could be appropriate artificial intelligence considerations for a variety of investors. More market participants seek AI diversification; they may attempt to reduce dependence on Nvidia as the sole avenue for participating in the megatrend.
Merit in AI Diversification
Nvidia is the largest holding in QQQ and QQQM, commanding 8.70% of the ETFs’ portfolios. However, the funds hold 100 other stocks beyond Nvidia indicating they have some AI diversification credentials. That’s relevant for multiple reasons.
First, plenty of other QQQ/QQQM member firms, including those commanding significant weights in the ETFs, are credible artificial intelligence names in their own rights. Second, there are no guarantees Nvidia will continue being the leader of the large/mega-cap AI equity lot.
“However, focusing solely on giants like Nvidia may not be the most strategic approach for investors aiming to build long-term wealth,” observed deVere Group CEO Nigel Green. “Instead, a broader view of the AI ecosystem is your best option for sustainable growth of your capital.”
The AI ecosystem is broad and rapidly expanding. Shares of many companies that aren’t Nvidia but are capitalizing on those trends reside in the Invesco ETFs.
“These companies operate across different segments, including software development, cloud computing, data analytics, and AI-driven services. By diversifying investments across this broader ecosystem, investors can mitigate risks and capitalize on multiple growth avenues,” added Green.
Not surprisingly, Nvidia has prompted some investors to consider AI through the lens of semiconductors. That’s a valid thesis. It’s accessible via QQQ and QQQM because, including Nvidia, the ETFs are homes to more than 15 chip stocks.
“These companies operate across different segments, including software development, cloud computing, data analytics, and AI-driven services. By diversifying investments across this broader ecosystem, investors can mitigate risks and capitalize on multiple growth avenues,” added Green. “By including these hardware providers in an investment portfolio, investors can gain broader exposure to the fundamental technologies driving AI advancements.”
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