To this point in the evolution of the artificial intelligence (AI) investment thesis, a small number of mega-cap stocks have emerged as viable names. As a result, market values on those stocks have ballooned. Meaning, those stocks now account for significant percentages of cap-weighted ETFs, including AI and technology funds.
That is to say, some broad market and sector funds may appear to be diverse on the surface. However, they betray that expectation. That’s the rub when Nvidia (NVDA) and a small number of other stocks lead the AI parade. Still, some experts believe now is a good time to consider broader bets. The WisdomTree Artificial Intelligence and Innovation Fund (WTAI) is an example of an ETF that answers that call.
Yes, Nvidia is WTAI’s largest holding, but at a comparatively small weight of 3.22% as of June 21. The largest of its 75 components commanding an allocation of just 3.22%. So, it’s fair to say WTAI is a diverse play. A point that’s confirmed when examining the weights of the top holdings in many tech sectors and other AI-adjacent ETFs.
Why WTAI Matters
WTAI reflects the semiconductor-intensive nature of AI as the ETF’s top seven holdings, including Nvidia, hail from that industry. These days, that’s a positive attribute. However, the fund also offers exposure to other parts of the AI ecosystem and that could be a long-term plus, too. Those include cloud computing firms and other related infrastructure plays.
“These companies offer scalable computing resources and AI tools that enable businesses of all sizes to integrate AI into their operations. Therefore, investing in these cloud giants is likely to offer stability and consistent returns, given their central role in the digital economy,” noted deVere Group CEO Nigel Green.
Getting back to semiconductors, there’s no getting around the point that chips are the foundation on which artificial intelligence resides. For investors considering WTAI, the good news is that the ETF leans into the theme as roughly 20 of its holdings are chip stocks and those are shares of companies that address a variety of AI needs and niches.
“Beyond Nvidia, other semiconductor companies are investing heavily in AI-specific chipsets. These components are crucial for enabling the computational power required by the tech’s algorithms,” 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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