An AI Bubble? Know Which AI ETFs Stand Out

Is the economy facing an AI bubble? While AI rode to the rescue as interest rates peaked in the last 12 months, boosting earnings, the discussion has since turned to whether AI’s boost to valuations may have been overblown. Whether legal challenges and regulatory hurdles or huge investments not yet producing profits for most AI firms, big issues remain for AI that call into question whether results are imminent.

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That may invite investors to revisit the types of AI ETFs in which they want to invest. In an AI bubble, knowing the difference between an ETF that invests in firms broadly benefitting from AI and an ETF that invests in firms at the forefront of AI can be a key piece of information. Investors may want exposure to the firms on the cutting edge of AI, but to avoid those firms benefitting from nebulous efficiency gains from AI.

Of course, that poses an intriguing question – what happens when the firms at the forefront of AI development also take up a huge portion of the stock market already? Firms like Alphabet (GOOGL) and Microsoft (MSFT) are key players in AI. AI ETFs for an AI bubble, then, may appeal if they add a helpful spin to either mitigate exposure to overweighted firms or really lean into the frontier aspect of AI.

AI ETFs for an AI Bubble

WisdomTree Artificial Intelligence and Innovation Fund (WTAI)

WTAI presents one option. The ETF tracks an equally weighted index of global stocks related to AI. The index committee chooses firms that generate at least half their revenue from AI and innovation.