Big tech’s strong fourth-quarter rally behind artificial intelligence (AI) has been well-documented, but the big question was whether it could sustain the run. So far it has, with the Direxion Daily Robotics, Artificial Intelligence & Automation Index Bull 2X ETF (UBOT) up almost 50% over the past three months.
The fund seeks daily investment results that equal to 200% of the daily performance of the Indxx Global Robotics and Artificial Intelligence Thematic Index. That index aims to provide exposure to companies in developed markets expected to benefit from the growing adoption and use of robotics and/or AI.
UBOT wasn’t immune to the equity stumble to start the new year, but it has recovered since then. With AI set to be a recurring theme for the rest of the year and beyond, it’s easy to see why. “Magnificent Seven” members like Amazon and Microsoft had strong revenues to pair with positive future guidance thanks to increased use of AI applications.
UBOT data by YCharts
A Single-Stock AI ETF
Of course, while the whole theme of AI is showing strength, there are individual companies that are also prospering. That’s especially the case when it comes to Nvidia. Like UBOT, the stock is also up about 50%, but that’s its year-to-date performance.
“Nvidia Corp.’s stock has rallied so much this year that it’s now threatening to overtake Amazon.com Inc. to become the fourth most valuable US company,” Fortune noted, adding the stock has “added nearly Tesla Inc.’s entire market capitalization in the past two months alone.”
Tailwinds certainly abound for the AI chipmaker, as more companies will require processing power to run AI applications. That should also help single-stock ETFs like the Direxion Daily NVDA Bull 1.5X Shares (NVDU), which is up over 80% year to date. Traders who want to capitalize on Nvdia’s bullishness can do so with NVDU, as it has an extra 50% exposure to the company’s stock.
“Nvidia is worth $1.72 trillion, just shy of Amazon at $1.76 trillion, as of Thursday’s (February 8) close,” Fortune added. “Google-owner Alphabet, the third most valuable US company after Microsoft Corp. and Apple Inc., isn’t too far away at $1.82 trillion.”
UBOT data by YCharts
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Originally published on ETFTrends.com on February 13, 2024.
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