Five Best AI ETF Stocks to Buy Now

Key takeaways

• AI ETFs offer diversification by including both tech giants and emerging innovators.
• Selection criteria prioritize low expense ratios, strong AI focus, and high net assets.
• Top ETFs deliver growth potential through diverse holdings and global exposure.
• Intellectia helps investors make smarter decisions with detailed analysis tools.

When you're investing in AI stocks, you want to make sure that you're putting your money into companies with strong potential for growth. You may struggle to differentiate companies with prospective AI capabilities versus those riding market trends. Through my five years as a technology sector analyst and managing AI-focused portfolios, I've established that ETFs offer a balanced approach to AI investing.

These funds combine established tech companies with emerging AI players while reducing your individual stock risk. You get updated on the performance of your investment from the ETF management team's research and market intelligence. Here are the five best AI ETFs to buy now:

What is an AI ETF stock

AI ETF stock is a type of investment fund that is traded on stock exchanges, similar to individual stocks. ETFs, or Exchange Traded Funds, are investment funds that pool money from investors to buy a group of assets like stocks, bonds, or commodities. AI ETFs have the fund concentrating on companies in artificial intelligence, robotics and similar technologies. These companies may include those developing AI software, manufacturing robotics, or integrating AI into their operations.

Criteria used for selecting AI ETF stocks to buy now

I adopted a systematic approach based on key financial and qualitative factors to determine the top AI ETFs for investors. The selection criteria include:

• Expense ratio of no more than 0.65%
• Minimum net assets of $250 million
• Portfolio holding at least 70 stocks
• Strong representation of AI-focused businesses
• Diversified asset allocation across tech sectors
• Proven track record of performance and growth
• Inclusion of both established companies and emerging innovators

Best AI ETF stocks to buy now

Here are my top seven large AI ETFs, with expense ratios ranging from 0.10% to 0.65%. Each fund offers unique investment strategies and advantages, catering to various investor goals. Below, I provide a brief overview of each fund's approach and highlight its key strengths.

1. Vanguard Information Technology ETF (VGT) - Broad Exposure to Leading Tech Innovators

By the numbers:

• Share price: $538.55
• Expense ratio: 0.10%
• Inception date: 01/26/2004
• Year-to-date return: 10.3%
• Number of holdings: 313
• 30-day SEC yield: 0.58%

Overview:

Through tracking the MSCI U.S. Investable Market Information Technology Index, investors are exposed to top technology companies by VGT. Although the ETF is not AI-specific, it is easy to see how its tech leaders' heavy focus will result in strong AI representation. Well-known companies, including Microsoft, Nvidia, and Broadcom, are included in key holdings to ensure the fund has exposure to the growing AI innovation.

Why we recommend VGT

Thanks to its low expense ratio and extensive diversification, VGT represents a high-quality choice for investors seeking stable and long-term growth in tech-driven portfolios. Over 50% of the portfolio is concentrated in its top 10 holdings, all of which play significant roles in advancing AI technologies. With a remarkable 10-year annual NAV return of 19.8%, VGT is an excellent option for tech-focused investors.

2. Fidelity MSCI Information Technology Index ETF (FTEC) - Affordable and Comprehensive Coverage

By the numbers:

• Share price: $159.82
• Expense ratio: 0.084%
• Inception date: 10/21/2013
• Year-to-date return: 10.4%
• Number of holdings: 304
• 30-day SEC yield: 0.57%

Overview:

FTEC tracks the MSCI USA IMI Information Technology Index, offering exposure to U.S. large-cap stocks. Its portfolio mirrors many of VGT’s top holdings, including giants like Apple, Nvidia, and Broadcom, which are leaders in AI and semiconductor technologies. This affordable ETF combines reliable tech exposure with a focus on cost efficiency.

Why we recommend FTEC

With its ultra-low expense ratio of 0.084%, FTEC offers excellent value for investors looking to capitalize on the AI boom. Its heavy allocation to semiconductor companies and technology hardware provides substantial AI exposure. The ETF is a solid bet for investors who want diversity across sectors without sacrificing growth potential or affordability.

3. SPDR S&P Kensho New Economies Composite ETF (KOMP) - Broader Exposure Beyond Mega-Caps

By the numbers:

• Share price: $47.68
• Expense ratio: 0.20%
• Inception date: 10/22/2018
• Year-to-date return: 2.2%
• Number of holdings: 435
• 30-day SEC yield: 0.94%

Overview

KOMP tracks companies innovating in AI, robotics, and automation by following the S&P Kensho New Economies Composite Index. This ETF caters to those looking beyond mega-cap tech stocks, spotlighting mid-sized firms like defense contractor Leidos Holdings and cutting-edge developer Teledyne Technologies. Its diverse holdings extend to areas such as aerospace and autonomous systems.

Why we recommend KOMP

For investors who want to reduce their reliance on the big tech juggernauts, KOMP’s focus on mid-cap innovation is a welcome change. Its international diversification is another layer of potential growth added, with exposure to geographies such as China, Israel and Brazil. KOMP is the ideal pick for those looking to capture AI potential without investing in large cap stocks.

4. iShares Robotics and AI Multisector ETF (IRBO) - Balanced AI and Robotics Portfolio

By the numbers:

• Share price: $34.48
• Expense ratio: 0.47%
• Inception date: 08/26/2018
• Year-to-date return: 0.1%
• Number of holdings: 109
• 30-day SEC yield: 0.51%

Overview

IRBO offers global exposure to both developed and emerging markets through investment in the NYSE FactSet Global Robotics and Artificial Intelligence Index. Its equal weight methodology ensures diversity since no single stock can have more than a controlling interest in the portfolio. Such a balance is attractive to those seeking to minimize the risks of overexposure to a few key players.

Why we recommend IRBO

IRBO is perfect for investors hoping to spread risk while participating in the AI and robotics revolution. By including emerging players alongside established ones, the ETF offers unique growth avenues. Its diversified approach ensures that shareholders benefit from a wide range of innovations within robotics and AI.

5. First Trust Nasdaq Artificial Intelligence and Robotics ETF (ROBT) - Comprehensive AI Ecosystem Approach

By the numbers:

• Share price: $43.84
• Expense ratio: 0.65%
• Inception date: 02/21/2018
• Year-to-date return: -4.0%
• Number of holdings: 108
• 30-day SEC yield: 0.24%

Overview

ROBT captures a full spectrum of AI applications by focusing on enablers, engages, and enhancers of AI technologies. By tracking the Nasdaq CTA Artificial Intelligence and Robotics Index, this ETF invests in companies making significant contributions across the AI ecosystem. Dividend stocks are distributed proportionally to represent the value chain effectively.

Why we recommend ROBT

For investors interested in comprehensive AI exposure, ROBT stands out with its balanced investment across industries and stages of AI development. Its inclusion of small, medium, and large companies ensures a well-rounded portfolio, ideal for those intrigued by the diverse possibilities of AI-driven advancements.

Conclusion

A portfolio of AI ETFs provides investors with good access to artificial intelligence while distributing their money across multiple assets to reduce their risk. These funds use proven tech leaders alongside new names from the AI industry to offer investors smart access to diverse sectors. Each ETF from VGT to ROBT creates specialized AI investment options that match investor demands across diverse risk profiles.

Platforms like Intellectia can enhance your decision-making with detailed insights and analysis. Whether you’re a seasoned investor or a beginner exploring AI opportunities, Intellectia provides tools that simplify stock evaluation and market trends. Start researching smarter with Intellectia today and take the first step towards capturing the future of AI investing.

Frequently asked questions

1. What are the risks associated with AI ETFs?

While AI ETFs reduce individual stock risk, they still carry market-related risks. The AI sector can be volatile due to rapid technological advancements and changing regulations. Economic downturns or shifts in investor sentiment toward high-growth industries may also impact returns. It's important to consider your risk tolerance before investing.

2. How do I choose the right AI ETF for my portfolio?

Consider factors like the ETF's expense ratio, net assets, diversity of holdings, and focus on AI-related companies. Look at the fund’s historical performance and its allocation across sectors and regions. Select an ETF that aligns with your investment goals, whether it’s long-term growth, low fees, or exposure to innovative companies.

3. How do I start investing in AI ETFs?

You can invest in AI ETFs through a brokerage account or an investment platform. Research the available ETFs, compare their metrics like expense ratios and holdings, and determine how they fit into your broader investment strategy. Start with a small allocation if you’re new to ETFs and gradually build your position as you grow more confident.